foraco international 2008 annual report

annual report 2008

integrity, innovation, involvement

26 Plage de l’Estaque13016 Marseille, France

www.foraco.com


corporate head office26 Plage de l’Estaque 13016 Marseille, France T: +33 (0)4 96 15 13 60 F: +33 (0)4 96 15 13 61 Website: www.foraco.com

board of directorsDaniel Simoncini (Chairman)Jean-Pierre CharmensatJean Paul CamusBruno ChabasWarren Holmes

transfer agentComputershare Trust Company of Canada 510 Burrard Street Vancouver, B.C. V6C 3B9

auditorsPricewaterhouseCoopers

legal counselFasken Martineau DuMoulin LLP

market dataShares of Foraco International S.A. are listed on the Toronto Stock Exchange under the symbol FAR

investor contactBruce Wigle The Equicom Group Inc. T: (416) 815-0700 ext. 228 E: [email protected]

annual general meetingMay 11, 2009, at 10:00 am 26, Plage de l’Estaque 13016 Marseille, France D

esig

n an

d P

rod

uctio

n b

y E

qui

com

, a T

MX

Gro

up C

om

pan

y.

shareholder information

profileForaco International SA is a global drilling contractor providing turnkey solutions for

mining, energy, water and infrastructure projects across 18 countries and five continents.

The company offers a modern drilling fleet, best-in-class safety standards and a versatile,

well-trained international workforce. Foraco has drilled in every conceivable geological

formation worldwide, often located in some of the most inaccessible regions of the world.

With extensive international drilling experience, Foraco has the expertise to efficiently and

safely meet customer requirements, whether it requires custom engineering of drill rigs

or specialized drilling techniques. Headquartered in Marseilles, France, Foraco is publicly

traded on the Toronto Stock Exchange under the ticker symbol “FAR”.

missionWe are focused on creating a world leading drilling services company by offering a unique

combination of global experience, local expertise, and constant customer focus.

valuesWe strive to run our business with the highest level of integrity, so that it is reflected in

everything we do, all of the time – be it in the field or in the office. We have set up a fluid,

pro-active, close-to-field organization that generates close involvement of our teams in

every customer project. We use innovation in each and every aspect of our business,

from our contractual approach and the way we set up project operations, to the design

and manufacture of specialized equipment for our customers.

financial highlights

+16%

Increased EBITDA resulted from overall

growth in business activity, strong operational

performance in both the Mining & Energy

and Water & Infrastructure segments,

and improved absorption of fixed costs. +25%

EBITDA* ($ millions)

5.9

06

17.7

07

22.2

08

With a 16% increase in revenue we

managed to achieve a significant increase

in net earnings compared to 2007,

reflecting our focus on profitable growth. +60%

net earnings ($ millions)

2.2

06

6.5

07

10.4

08

Increased revenue in 2008 was primarily

attributable to the robust level of business

activity in the Mining & Energy segment in the

first half of 2008, continued steady business

activity in the Water & Infrastructure segment,

and our strategic diversification between

various geographical areas and commodities.

revenue ($ millions)

35.1

06

74.6

07

86.6

08

* Foraco defines EBITDA as operating profit, plus depreciation, amortization and non-cash share based compensation. EBITDA is a non-IFRS measure and is not a substitute for operating profit, profit for the period or net cash generated from operating activities as determined in accordance with IFRS. As EBITDA is not calculated identically by all companies, Foraco’s presentation of EBITDA may not be comparable to other similarly titled measures of other companies.

1

at a glance

global presence

North America Canada, United States

Europe France, Germany, England, Russia

South America Peru, Chile

Asia-Pacifi c New Caledonia

Africa Burkina Faso, Chad, Gabon, Ivory Coast, Ghana, Guinea, Mali, Niger, Mauritania

balanced commodity mix*

top-tier customer base

mining & energy

Areva

BHP Billiton

Cameco

De Beers

Eramet

Newmont

Peregrine Diamonds

Rio Tinto

Teck

Vale Inco

Wallbridge Mining

Xstrata

water & infrastructure

African Development Bank Group

European Development Fund

French, Danish and German Development Agencies

Nestlé

The World Bank

UEMOA

UNICEF

Veolia

modern drill fleet

115 rigs

51 rotary

44 diamond

20 combination

* Based on 2008 revenue

1%

4%

8%

14%

15%

16%

19%

23%

Coal

Potash

Precious Metals

Uranium

Other Base Metals

Iron

Nickel

Water

3

mining & energy

Drilling is an essential service required by every mining company. Be it

for exploration, development, production, rehabilitation or even closure,

drilling is required at all stages in the life of a mine. There are multiple

parameters that drive a drilling contract, ranging from the size and scope

of the project, ground conditions, sample requirements, hole depths,

accessibility, water supply, and the customer’s technical requirements.

Foraco has a diverse service offering that addresses all of these needs

and can provide a customized turnkey drilling solution for every project.

5

Reverse circulation

Diamond core

Rotary

Down-the-hole hammer

Direct circulation

Air core

Rotary air blast

mining & energy

Despite the overall slowdown of exploration and related mining activities

in the second half of 2008, Foraco has been able to deliver strong

fi nancial results and has a solid order book for the coming year.

This ongoing success is supported by Foraco’s preferred supplier status

with top-tier mining companies and the company’s commitment to

developing and sustaining long-term relationships with top mining

and energy customers around the world.

water & infrastructure

Increasing access to clean water for millions of people is a global challenge, especially in regions

where Foraco works. Additionally, environmental and social pressures require that new and innovative

solutions be found for the supply of water throughout the world. This places an increased dependence

on groundwater as an alternative source which can only be developed by drilling.

While Foraco has been drilling water wells for almost 50 years, the technical drilling requirements

continue to evolve. Larger, deeper wells are often the only alternative for supplying water, especially in

the developing world where water is the most sought after commodity of all.

Foraco has developed its capabilities signifi cantly over the years becoming a specialist in drilling for

drinking water, irrigation and industrial water. The company has the capability to undertake large scale

rural water drilling programs for as many as 500 wells per project, highly specialized drilling projects to

access mineral water utilizing sanitary protection methods and large diameter well fi elds in urban and

suburban areas.

Reverse circulation

Rotary

Down-the-hole hammer

Direct circulation

9

The second half of 2008 saw a significant drop in activity within our Mining & Energy segment which is directly linked to declining metals prices and uncertainty in the capital markets. These conditions resulted in the cancellation or postponement of projects throughout the industry. However, our revenue in the third quarter of 2008 remained stable compared to the third quarter a year ago and we experienced only a slight decline in revenue in the fourth quarter in an increasingly competitive business environment.

Despite these difficult conditions, we completed the acquisition of North West Sequoia Drilling Ltd., a mining rotary drilling company based in Calgary, Alberta, that specializes in large diameter bulk sampling for coal and diamonds as well as oil sands drilling. This acquisition adds another dimension to our business in North America, and provides for considerable synergies and opportunities for collaboration with our existing rotary business throughout the world.

While our ability to grow is strongly influenced by the metals and commodity markets, our performance in the field and the business relationships we develop play an increasingly important role in retaining or increasing our market share. To ensure we make the most of our opportunities, we adhere to a disciplined business development strategy and foster the commitment of our entire team to our shared values of: integrity, innovation and involvement. These are the trademarks of Foraco, a world leading drilling services company, offering a unique combination of global experience, local expertise and constant customer focus.

We launched a strategic initiative to develop our business in North America in 2006 and have made considerable progress since that time. The acquisitions we made have been fully integrated and we have succeeded in raising our profile with key customers by consistently providing a superior level of service. We have built stronger relation-ships with top tier companies over this period such as Vale Inco, Cameco, Areva, Xstrata and De Beers, to name only a few. Foraco is now viewed as a preferred drilling services provider in this key market, a strength that can be leveraged around the world.

Going forward, we believe we are well positioned despite the recent decline in the mining sector and that the longer term fundamentals and prospects in the resource sector remain sound. Even today, our top tier Mining & Energy customer base are continuing to explore or further develop their properties, only in a more selective manner. The current economic situation has had a greater impact on the activities of junior exploration companies, which we have limited exposure to. The current slowdown in activity in our mining business is also somewhat offset by our Water & Infrastructure segment, which remains strong and less sensitive to the current global economic situation.

letter to shareholders

Without question, 2008 was an outstanding year. We achieved record

financial performance and significantly strengthened our position in key

markets; both important measures in these uncertain times. Revenue for

the year increased 16.1% to €86.6 million, up from €74.6 million a year

ago; gross profit grew 25.7% to €26.0 million; and net income increased

60.3% to €10.4 million or €0.18 per share. Results were driven by robust

market conditions in our Mining & Energy segment during the first half of

2008, ongoing stability in our Water business segment, and strong, safe

operational performance by the Foraco team.

Another key competitive strength resulting from our business development strategy is the diversity of our services offering and our ability to react quickly to a changing market. Today, we are providing different types of drilling services such as large diameter bulk sampling for diamonds and other mine site related drilling work. Our ability to complete large scale rotary drilling projects and our expertise in water has enabled us to offer these services to the solution mining operators, which is a market that is altogether separate from the exploration business. In late 2008, we started our first potash solution mining drilling contract in Central Africa.

We are continuing with our strategy of geographical diversification in a planned and measured way. With our recent expansion into Russia we now have opera-tions in 18 countries across five continents. Our growth strategy will see us further develop our business across geographical regions, industry segments, customers, and commodities without losing focus on our profitability. We believe that current market conditions will also present growth opportunities in new jurisdictions which we will evaluate from the perspective of creating value.

We have a strong balance sheet with €14.1 million in cash and equivalents as at December 31, 2008, and undrawn short term credit facilities amounting to €12.7 million. We are not under the constraint of any financial covenants. We closed the year with a record order backlog of €56.8 million, €3.0 million more than at 2007 year end.

None of this would have been possible if it were not for the talented Foraco team. In 2008, we strengthened our senior management ranks in key areas including human resources, risk management and operations, enabling us to focus more on growth opportunities and other corporate development initiatives. We are very proud of our ability to attract and retain top talent and want to take this opportunity to thank all of our employees for helping make 2008 a record year.

We are confident that our strategy of developing long-term relationships with the right customers, providing a diversified and innovative service offering anywhere our customers need us, and further developing our strong position in the Water & Infrastructure market, will help mitigate the impact of current economic conditions on our business. We manage our business with a long term view and we are confident that over time, we will continue to build value for our shareholders.

On behalf of our dedicated employees, senior management and Board of Directors, we thank you for your continued support.

Sincerely,

Daniel Simoncini Jean-Pierre Charmensat Chairman & CEO Vice-CEO & CFO

Dani

el S

imon

cini

Jean

-Pie

rre

Char

men

sat

11

Management’s Discussion and Analysis 13

Independent Auditors’ Report 21

Consolidated Balance Sheet — Assets 22

Consolidated Balance Sheet — Equity & Liabilities 23

Consolidated Statement of Income 24

Consolidated Statement of Changes in Equity 25

Consolidated Statement of Cash Flow 26

Notes to the Consolidated Financial Statements 27

1. GENERAL INFORMATION 27

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 27

3. FINANCIAL RISK MANAGEMENT 35

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS 38

5. SEGMENT INFORMATION 39

6. PROPERTY AND EQUIPMENT 41

7. GOODWILL 42

8. INVESTMENTS IN ASSOCIATES 44

9. OTHER NON-CURRENT ASSETS 45

10. INVENTORIES 45

11. TRADE RECEIVABLES 46

12. OTHER CURRENT RECEIVABLES 46

13. CASH AND CASH EQUIVALENTS 47

14. EQUITY ATTRIBUTABLE TO THE COMPANY’S EQUITY HOLDERS 48

15. MINORITY INTEREST 50

16. BORROWINGS 50

17. DEFERRED INCOME TAX 52

18. PROVISIONS 53

19. RETIREMENT BENEFIT OBLIGATION 53

20. TRADE AND OTHER PAYABLES 54

21. EXPENSES BY NATURE 54

22. REORGANIZATION PROGRAM 55

23. SHARE-BASED COMPENSATION 55

24. FINANCE COSTS 56

25. INCOME TAX EXPENSE 57

26. NET FOREIGN EXCHANGE GAIN/(LOSSES) 57

27. EARNINGS PER SHARE 57

28. DIVIDENDS PER SHARE 57

29. COMMITMENTS AND CONTINGENCIES 58

30. RELATED-PARTY TRANSACTIONS 58

31. EVENTS AFTER THE BALANCE SHEET DATE 58

table of contents

Foraco International | Annual Report 2008 13

FORACO INTERNATIONAL S.A. MANAGEMENT’S DISCUSSION AND ANALYSISThe following Management’s Discussion and Analysis (“MD&A”) relates to the results of operations, liquidity and capital

resources of Foraco International S.A. (“Foraco” or the “Company”). This report has been prepared by management and

should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended

December 31, 2008, including the notes thereto. These annual audited consolidated financial statements were prepared in

accordance with International Financial Reporting Standards (“IFRS”) rather than Canadian Generally Accepted Accounting

Principles (Canadian “GAAP”), on the basis that the Company is a “foreign issuer” as defined under National Instrument

52‑107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (“NI 52‑107”). These annual audited

consolidated financial statements were prepared using accounting policies and methods consistent with those used in

the preparation of the Company’s audited consolidated financial statements for the year ended December 31, 2007 filed

on March 31, 2008. Except when otherwise stated, all amounts presented in this MD&A are denominated in Euros (€).

The discussion and analysis within this MD&A are as of March 31, 2009.

Caution Concerning Forward-Looking StatementsThis document may contain “forward‑looking statements” and “forward‑looking information” within the meaning of

applicable securities laws. These statements and information include estimates, forecasts, information and statements

as to management’s expectations with respect to, among other things, the future financial or operating performance of

the Company and capital and operating expenditures. Often, but not always, forward‑looking statements and information

can be identified by the use of words such as “may”, “will”, “should”, “plans”, “expects”, “intends”, “anticipates”,

“believes”, “budget”, and “scheduled” or the negative thereof or variations thereon or similar terminology. Forward‑looking

statements and information are necessarily based upon a number of estimates and assumptions that, while considered

reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and

contingencies. Readers are cautioned that any such forward‑looking statements and information are not guarantees and

there can be no assurance that such statements and information will prove to be accurate and actual results and future

events could differ materially from those anticipated in such statements. Important factors that could cause actual results to

differ materially from the Company’s expectations are disclosed under the heading “Risk Factors” in the Company’s Annual

Information Form for the year ended December 31, 2008, which was filed March 31, 2009, with Canadian regulators on

SEDAR (www.sedar.com). Except as required by Canadian Securities Law, the Company expressly disclaims any intention

or obligation to update or revise any forward‑looking statements and information whether as a result of new information,

future events or otherwise. Such statements speak only as of the date they are made. All written and oral forward‑looking

statements and information attributable to Foraco or persons acting on our behalf are expressly qualified in their entirety

by the foregoing cautionary statements.

This MD&A is presented in the following sections:

– Business Overview– Annual Consolidated Financial Highlights– Results of Operations for the Year Ended December 31, 2008– Exposure to the Recent Global Economic Slowdown– Effect of Exchange Rate– Liquidity and Capital Resources– Related Party Transactions– Capital Stock– Critical Accounting Estimates– Litigations– Subsequent Events– Outlook– Disclosure Controls and Procedures and Internal Control over Financial Reporting– Risk Factors

14 Management’s Discussion and Analysis

Business OverviewHeadquartered in Marseilles, France, Foraco is a worldwide drilling service provider with operations in 18 countries.

The Company operates 115 drill rigs throughout the world providing a diverse range of drilling services to its customer

base. The Company has developed and acquired significant expertise in destructive and non‑destructive drilling, as well

as proprietary drill rig design capabilities, which allows Foraco to tailor solutions to meet the specific conditions and

drilling requirements of certain customers, such as mining companies, governmental organizations, and international

development funds. From its operations on five continents, the Company services a range of industries including mining,

energy, water, environmental and infrastructure.

Foraco specializes in drilling in harsh environments and isolated locations, including, arctic, desert and mountainous

regions, and generally in circumstances where operations are challenged by logistical matters and geographic barriers.

The Company’s engineers and technicians have developed special drilling methods where the geology prevents use of

standard techniques and equipment. The Company has specialized equipment for, among other uses, helicopter‑based

drilling campaigns, combination rigs able to perform multi‑drilling technique contracts, desert‑suited rigs and large diameter

core sampling systems.

ANNUAL CONSOLIDATED FINANCIAL HIGHLIGHTS

(In thousands €) (audited)

Year ended December 31,

2008 2007

Revenue 86,554 74,578

Gross profit 25,977 20,660

As percentage of revenue 30% 28%

Operating profit 15,899 11,500

Profit for the year 10,415 6,498

Revenue for the year ended December 31, 2008 totaled • €86.6 million, representing a 16.1% increase compared

to the year ended December 31, 2007.

Gross profit, which includes depreciation expense, increased 25.7% to • €26.0 million from €20.7 million a

year ago.

Net profit for the year ended December 31, 2008 amounted to • €10.4 million (12.0% of revenue) compared to

€6.5 million (8.7% of revenue) for the year ended December 31, 2007.

On September 24, 2008, Foraco acquired Northwest Sequoia Drilling Ltd. (“NWS”), a Canadian company special‑•

izing in rotary drilling services (exploration, bulk sampling and coring) within the mining and energy industries.

Foraco had a • €56.8 million order backlog at year end 2008, compared to €53.3 million as at December 31, 2007.

On March 2, 2009, the Board of Directors proposed a dividend payment amounting to • €0.014 per common share

to be approved by Foraco shareholders at the Company’s Annual General Meeting to be held on May 11, 2009.


Results of Operations for the Year Ended December 31, 2008

Revenue

The following table provides the breakdown of the Company’s revenue for the years ended December 31, 2008 and

December 31, 2007, by reporting segment and geographic region:

(In thousands of €)(unaudited)

Year ended Dec 31, 2008 % change

Year ended Dec 31, 2007

Reporting segment

Mining & Energy 66,298 23% 53,947

Water, Environmental & Infrastructure 20,256 ‑2% 20,631

Total revenue 86,554 16% 74,578

Geographical region

Africa 44,757 27% 35,254

Europe 6,453 ‑15% 7,550

Asia Pacific 7,662 13% 6,751

Americas 27,683 11% 25,023

Total revenue 86,554 16% 74,578

For the year ended December 31, 2008, revenues totaled €86.6 million compared to €74.6 million in 2007.

Foraco’s Mining segment benefited from favorable general market conditions in the first half of 2008. This trend

slowed as a result of the cancellation or postponement of certain projects in Canada and the United States during the

second half of 2008 and particularly in the fourth quarter of 2008. In the Water segment, revenue decreased by 2%,

primarily as a result of the Company’s strategic decision to reallocate certain drilling equipment from the Water segment to

the Mining segment during the first half of 2008.

Revenue from Africa increased by €9.5 million (+ 27%), primarily due to water drilling projects, large mineral

exploration projects and solution mining projects in Western Africa. In Europe, revenue decreased by €1.1 million as

a result of postponement of new projects and subsequent relocation of some drilling equipment from Europe to Africa.

In Asia Pacific, revenue increased by €0.9 million primarily in the Mining segment compared to the same period in 2007.

In the Americas, revenue increased by €2.5 million, mainly due to strong demand and a deployment of additional new

drilling equipment in the Mining segment both in Canada and the United States, during the first half of 2008. This annual

increase was mitigated by the slow down of exploration activities attributed to mining companies during the second half

of 2008 and particularly during the fourth quarter of 2008.

Operating Profit

The following table provides the breakdown of the Company’s operating profit for the year ended December 31, 2008 and

December 31, 2007 by reporting segment:

(In thousands of €) (unaudited)



Reporting segment

Mining & Energy 12,494 40% 8,932

Water, Environmental & Infrastructure 3,404 33% 2,568

Total operating profit 15,899 38% 11,500

For the year ended December 31, 2008, operating profit increased by 38% or €4.4 million, compared to the year

ended December 31, 2007. In the Mining segment, the Company’s operating profit increased to €12.5 million in 2008

(18.8% of revenue) compared to €8.9 million in 2007 (16.6% of revenue). Increased operating profit is primarily due to

an increase of business activity in the first half of the year and strong operating performance throughout the year. For the

year ended December 31 2008, the Company’s operating profit in the Water segment increased to €3.4 million (16.8% of

revenue) compared to €2.6 million (12.4% of revenue) in 2007. Increased operating profit in the Water segment is primarily

attributable to higher operating margins in water drilling projects in West Africa.


Operating Expenses (Excluding Cost of Sales)

The following table provides a breakdown of the Company’s operating expenses (excluding cost of sales), for the year

ended December 31, 2008 and 2007:

(In thousands of €)(unaudited)



Selling and marketing expenses 2,843 12% 2,543

General and administrative expenses 7,055 30% 5,412

Other (income) and expense, net 180 ‑38% 291

Share of profit from associates — N/A (69)

Share based compensation expenses — N/A 983

Total 10,078 10% 9,160

For the year ended December 31, 2008, operating expenses (excluding cost of sales) increased by €0.9 million

compared to the year ended December 31, 2007. Selling, general and administrative expenses as a percentage of sales

represented 11.4% in 2008, in comparison with 10.7% in 2007. This increase is due to the Company’s increased business

development activity, the ongoing costs related to the public listing of the Company, the initiatives taken to further strengthen

corporate organization and controls, as well as the impact of the integration of NWS. In 2007, Foraco granted free common

shares to certain executive employees and warrants to underwriters in connection with the Company’s IPO.

Financial Expenses / Gains

For the year ended December 31, 2008, net financial gains totaled €0.1 million compared to net financial expenses of

€0.8 million for year ended December 31, 2007. This decrease in financial expenses is due to Foraco’s annualized average

improvement in cash position throughout 2008. The proceeds from the IPO were received in August 2007.

Income Tax

The effective corporate income tax rate for 2008 was 35%, compared to 36% in 2007. The effective corporate income tax

rate is affected by the relative weight of income tax payable in the various tax jurisdictions where the Company operates.

Exposure to the Recent Global Economic SlowdownAlthough Foraco experienced a slowdown in its business activity during the second half of 2008, as a result of certain

project postponements or cancellations by mining customers, Foraco maintained a steady level of revenue and

operating profit. The Company generated revenue amounting to €20.5 million in the third quarter of 2008 compared to

€20.4 million in the third quarter of 2007, and revenue amounting to €18.8 million in the fourth quarter of 2008 compared

to €19.6 million in the fourth quarter of 2007.

The Company believes that its strategy of focusing on the development of long‑term relationships with top‑tier

mining companies, maintaining a diversified revenue split between various geographical areas and different commodities,

will help to mitigate the impact of the current economic conditions in its Mining segment. Foraco believes its Water

segment is less cyclical in nature as the majority of its revenue is generated by international institutions, such as the

European Development Fund and the World Bank. The Company considers that it has a strong financial structure

and believes that it will be able to generate sufficient cash flow to meet its current and future working capital, capital

expenditure, and debt obligations.

The Company has performed an impairment review of its long‑lived assets using different scenarios and has

concluded that no impairment charge was required.

Effect of Exchange RateForaco reports its audited consolidated annual financial statements in Euros (“€”). For the year ended December 31, 2008,

the Company earned 64% of its revenue in € compared to 66% in the year ended December 31, 2007. The majority of

the remaining revenue was generated in Canadian dollars (“C$”).

The Company seeks to mitigate its exposure to foreign currency fluctuations. In Canada, costs and revenues are

denominated in C$ resulting in a natural hedge. No hedging transactions were entered into in either 2007 or 2008.

The average exchange rate between € and C$ for the twelve‑month period ended December 31, 2008 was C$1.56

for €1.00. The closing rate at the end of December 2008 was C$1.70 for €1.00.


Liquidity and Capital ResourcesFor the year ended December 31, 2008, cash generated from operations before changes in working capital totaled

€21.8 million compared to €18.3 million for the year ended December 31, 2007.

For the year ended December 31, 2008, working capital requirements increased by €3.6 million. This is primarily

attributable to an increase in business activity related to new projects in Africa, which generated increased inventories.

Trade accounts receivable decreased €2.7 million due to improved collection of receivables and the general slow down of

activity in the fourth quarter of 2008 which generated a decrease in trade accounts payable. Net cash flow from operating

activities after interest and income tax paid in 2008 amounted to €14.2 million compared to €16.4 million in 2007.

For the year ended December 31, 2008, purchases of operating equipment totaled €12.2 million, compared to

€7.1 million in 2007. Capital expenditures included €7.9 million for six new drill rigs and ancillary equipment delivered

in 2008, and €3.1 million related to the purchase of transportation equipment. During the fourth quarter, the Company

sold two drill rigs that did not meet its operating standards. Foraco has commenced a thorough program to reassess its

drilling rig fleet so as to optimize operating efficiency, reduce maintenance costs, and improve overall safety. This program

will continue in the first part of 2009, as the Company expects to dispose of nine additional drill rigs which have already

been fully depreciated.

The acquisition of NWS resulted in a cash disbursement of €4.3 million in September 2008. Following the agreement

reached during 2008 with the Vendors of the Canadian assets of Connors Drilling (“Connors”), the amount held in escrow

in connection with the Connors acquisition (amounting to €0.7 million) has been released to the benefit of the Company.

Net cash used in financing activities amounted to €7.3 million. €3.4 million was used to purchase 1.5 million

Foraco common shares from a single shareholder and 0.1 million common shares via the TSX through the Company’s

Normal Course Issuer Bid (“NCIB”) filed on October 1, 2008. Pursuant to the NCIB, the Company may purchase up to one

million of its common shares. These purchases of Foraco shares were done to meet the Company’s obligations under its

free share plan for certain executive employees and for the purpose of acquisitions. During 2008, 1.150 million treasury

shares were transferred as partial consideration to NWS vendors. Principal repayments on capital leases and borrowings

amounted to €1.9 million in 2008. A €0.014 dividend per share was distributed during 2008 (€0.8 million). The Company

decreased short term loans linked to the financing of trade receivables by €1.4 million during 2008. .

As at December 31, 2008, cash and cash equivalents totaled €14.1 million compared to €23.3 million as at

December 31, 2007. This decrease in cash and cash equivalents was primarily attributable to cash consideration paid

in the Company’s acquisition of NWS, increased working capital requirements and the purchase of 1.6 million Foraco

common shares, a portion of which were used to fund the NWS acquisition. The Company’s cash investment strategy

aims to not take capital risks and to reach a global performance level equivalent to the reference free risk interest rate on

the € currency market. Cash and cash equivalents are mainly comprised of short‑term deposits denominated in €. Cash

and cash equivalents are invested within top tier European financial institutions.

As at December 31, 2008, total financial debt amounted to €4.7 million (€7.7 million at December 31, 2007).

The Company had short‑term credit facilities of €14.9 million (of which €12.7 million was undrawn) as at December 31,

2008, compared to €16.3 million as at December 31, 2007 (of which €12.7 million was undrawn). The Company is not

subject to any financial covenants.

As at December 31, 2008, maturity of financial debt can be analyzed as follows (€000s):

MaturityLess than one year

Between one and five years

More than five years Total

Bank overdraft — — — —

Assignment of trade receivables with recourse 2,205 — — 2,205

Bank financing 605 738 — 1,344

Capital lease obligations 454 744 — 1,198

Total financial debt 3,264 1,482 — 4,746

As at December 31, 2008, the cash (net of debt) to shareholders’ equity ratio amounted to 0.18 compared to

0.33 as at December 31, 2007, where net debt included short and long‑term borrowings.

Bank guarantees, as at December 31, 2008 totaled €18.3 million, compared to €17.0 million as at December 31,

2007. Available bank guaranteed lines were €33.2 million as at December 31, 2008 and December 31, 2007.


Cash Transfer Restrictions

Foraco operates in a number of different countries where cash transfer restrictions may exist. The Company organizes its

affairs so as to ensure that the majority of the payments are collected in countries where there are no such restrictions.

No excess cash is held in countries where cash transfer restrictions exist.

Off-Balance Sheet Items

In addition to bank guarantees provided, Foraco pledged some of its Canadian assets, as described in Note 29 of the

audited consolidated annual financial statements.

Related Party TransactionsFor details on related party transactions, please refer to Note 30 of the audited consolidated annual financial statements.

Capital StockAs at December 31, 2008, the capital of the Company consisted of €910,781, divided into 59,743,000 common shares.

The share capital of the Company was distributed as follows:

Number

of shares %

Common shares held directly or indirectly by principal shareholders 37,594,498 62.93%

Common shares held by individuals in their quality of members of the Board of Directors 40,003 0.07%

Common shares held by the Company(*) 455,244 0.76%

Common shares within the public 21,653,255 36.24%

Total common shares issued and outstanding 59,743,000

* 455,244 common shares are held by the Company to meet the Company’s obligation under the employee free share plan and for the purpose

of potential acquisitions.

Critical Accounting EstimatesThe audited consolidated annual financial statements have been prepared in accordance with IFRS rather than Canadian

GAAP and may not be comparable to the financial statements of other Canadian issuers. The Company’s significant

accounting policies are described in Note 2 to the audited consolidated annual financial statements. The Company has

obtained from various applicable securities regulatory authorities in Canada a waiver from the technical requirements under

the Canadian prospectus rules to reconcile its financial statements in accordance with Canadian GAAP on the basis that

it is a “foreign issuer” as defined under NI 52‑107.

LitigationsThere have been no new material litigations nor any significant changes to the Company’s exposure to contingencies

compared to the year ended December 31, 2007.

In 2004, the Company launched an arbitration process against a former customer Codelco, a Chilean state‑

owned company. This dispute arose following the breach of the provisions of a drilling contract in relation to the fiscal

years ended December 31, 2002 and December 31, 2003. In November 2008, the arbitrator issued his final decision,

whereupon Codelco was required to pay for certain drilling services that were previously contested, for a net amount

of US$0.8 million or €0.6 million including accrued interest. This decision is final, except for one further claim still

challenged by the Company related to the “breach of contract” submitted to the Appeals Court.

Subsequent EventsFor details on subsequent events, please refer to Note 31 of the audited consolidated annual financial statements.

On January 28, 2009, the Company was awarded a diamond exploration drilling services contract in Russia valued

at approximately €10.0 million in revenue for the 2009 fiscal year.

On March 2, 2009, the Board of Directors proposed a dividend payment of €0.014 per common share to be

approved by Foraco shareholders at the Company’s Annual General Meeting on May 11, 2009.


OutlookThe Company’s business strategy is to continue to expand through the development and optimization of its service

offering across geographical regions and industry segments, as well as through the enlargement of its customer base.

Foraco expects it will continue to execute on its strategy through a combination of organic growth and development and

acquisitions of complementary businesses in the drilling services industry.

As at December 31, 2008, the Company’s order backlog for continuing operations was €56.8 million, of which

€48.0 million is expected to be executed during the fiscal year ending December 31, 2009. This compared to an order

backlog as at December 31, 2007 of €53.3 million of which €47.5 million was expected to be executed during the 2008

fiscal year.

The Company’s order backlog consists of sales orders. Sales orders are subject to modification by mutual consent

and in certain instances orders may be revised by the customers. As a result, order backlog as of any particular date may

not be indicative of actual operating results for any succeeding period.

On January 28, 2009, the Company was awarded a drilling services contract in Russia in diamond exploration.

This contract relates to large diameter drilling and bulk sampling for diamonds, representing €10.0 million in estimated

revenue for 2009 fiscal year, which is not included in the Company’s order backlog as at December 31, 2008.

As at March 31, 2009, the Company has not suffered from any cancellation or postponement of any significant

contract included in the backlog as at December 31, 2008.

Disclosure Controls and Procedures and Internal Control Over Financial ReportingPursuant to NI 52‑109, the directors of the Company are required to certify annually as to the design and operations of

their (i) disclosure controls and (ii) internal controls over financial reporting.

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is

gathered and reported on a timely basis so that appropriate decisions can be made regarding public disclosure. It covers

the preparation of Management’s Discussion and Analysis and the Annual Consolidated Financial Statements. Internal

control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of financial statements in accordance with International Financial Reporting Standards (IFRS).

The section below is the result of an analysis carried out in conjunction with the management, the Audit Committee

and the various employees involved in the control activity within the Company.

Internal Control Framework

Internal control is a process implemented by management with the objective to ensure: (i) the effectiveness and efficiency

of the Company’s operations; (ii) the reliability of financial reporting and disclosures; and (iii) compliance with applicable

laws and regulations, including those promoted by the Toronto Stock Exchange (TSX).

The organization of the internal control environment of the Company is based upon the Internal Control – Integrated

Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

The inherent limitation in all control systems are such that they can provide only reasonable, not absolute, assurance

that all control issues and instances of fraud or error, if any, within the Company have been detected.

Responsibilities Over Internal Control

The Company’s Board of Directors is the primary sponsor of the internal control environment. The Audit Committee,

the Compensation Committee and the Corporate Governance and Nominating Committee are the specific bodies

acting in the field of internal control and reporting to the Board of Directors. These committees comprise a majority of

independent members.

Audit Committee

The Audit Committee meets at least every quarter before the Board of Directors meeting authorizing for issuance the

quarterly and annual consolidated financial statements. The main missions of the Audit Committee are the examination

of the quarterly and annual financial statements including related disclosures, the internal control environment and the

oversight of the work performed by the external auditors. The question of internal control over financial reporting is a core

subject discussed by the Audit Committee. In the course of the 2008 financial year, the Audit Committee met five times.


Compensation Committee

The principal missions of the Compensation Committee are the examination of the Company’s remuneration policy,

in particular changes in the global payroll, and the review of the collective and individual objectives. The Compensation

Committee meets at least once a year. In the course of the 2008 financial year, the Compensation Committee met

one time.

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee meets at least every quarter prior to the quarterly Board of

Directors meetings. It reports to the Board of Directors and is in charge of the supervision of the governance of the

Company and its relationship with senior management. Since its creation in November 2008, the Corporate Governance

and Nominating Committee met once during the 2008 financial year.

Internal Control Organization Within the Company

The Company operates in various different countries worldwide and has organized its internal reporting process into a

monthly centralized system which allows the flows of relevant operating and financial data upstream to management.

The subsidiaries report under standardized forms which are prepared in accordance with IFRS. These forms include

financial information such as detailed income statement data, cash flow and working capital data, capital expenditures

and other relevant operational data. This reporting, combined with a comprehensive budgeting process and systematic

reforecasting, reflects the latest operating conditions and market trends and allows management to perform thorough

variance analysis. Management considers that this monthly reporting process provides a reasonable assurance over the

monitoring of its operating and financial activities and an effective tool for the operating decision makers.

The financial controlling function is organized by region, internal control being a significant part of the regional

controllers’ duties. Timely on site reviews are performed by operating and financial representatives from corporate.

Considering this organization, there is no dedicated internal control department.

Approach Implemented by the Company

The Company implements an approach consisting in (i) evaluating the design of its control environment over financial

reporting and (ii) documenting the related control activities and key controls.

The Company views its internal control procedure as a process of continuous improvement and will make changes

aimed at enhancing the effectiveness of its internal control and to ensure that processes evolve with the business.

There were no changes in internal control over financial reporting that have materially affected, or are reasonably

likely to materially affect, the Company’s internal control over financial reporting.

The Company has evaluated the effectiveness of the internal control procedures over financial reporting as of

December 31, 2008 and has concluded that, subject to its inherent limitations, these were effective at a reasonable

assurance level. The Company has evaluated the effectiveness of the Company’s disclosure controls and concluded that,

subject to its inherent limitations, the disclosure controls were effective for the year ended December 31, 2008.

Risk FactorsFor a comprehensive discussion of the important factors that could impact the Company’s operating results, please refer

the Company’s 2008 Annual Information Form, under the heading “Risk Factors”, which was filed on March 31, 2009 with

Canadian regulators on SEDAR (www.sedar.com).


INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Board of Directors of Foraco International SA

Report on the Consolidated Financial Statements

Introduction

We have audited the accompanying consolidated financial statements of Foraco International SA and its subsidiaries

(the Group) which comprise the consolidated balance sheet as of December 31, 2008 and the consolidated income

statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended

and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in

accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and

maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from

material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making

accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted

our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free

from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order

to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial

position of the Group as of December 31, 2008, and of its financial performance and its cash flows for the year then ended

in accordance with International Financial Reporting Standards.

PricewaterhouseCoopers

Marseille, France

30 March 2009

PricewaterhouseCoopers is represented by PricewaterhouseCoopers Audit, 63 rue de Villiers —92200 Neuilly‑sur‑Seine, France.

22 Consolidated Financial Statements

FORACO INTERNATIONAL Consolidated Financial Statements

Audited consolidated financial statements as of December 31, 2008

Consolidated Balance Sheet — Assets

As at December 31,

In thousands of € Note 2008 2007 2006

ASSETS

Non-current assets

Property and equipment (6) 23,094 16,323 11,411

Goodwill (7) 8,594 4,260 1,914

Other intangible assets — 153 —

Investments in associates (8) — — 75

Deferred income tax assets (17) 93 513 645

Other non‑current assets (9) 207 340 413

31,986 21,588 14,458

Current assets

Inventories, net (10) 14,829 13,389 11,081

Trade receivables, net (11) 12,521 15,898 13,024

Other current receivables (12) 6,519 5,793 4,376

Cash and cash equivalents (14) 14,055 23,264 3,313

47,924 58,343 31,794

Total assets 79,910 79,931 46,252

The accompanying notes to the financial statements form an integral part of these consolidated financial statements.




Consolidated Balance Sheet — Equity & Liabilities As at December 31,


EQUITY

Capital and reserves attributable to the Company’s equity holders

Share capital (14) 911 911 657

Share premium and retained earnings (14) 52,756 44,785 15,064

Other reserves (14) (1,299) 700 (1,210)

52,368 46,396 14,511

Minority interest in equity (15) 189 171 112

Total equity 52,557 46,567 14,623

LIABILITIES

Non-current liabilities

Borrowings (16) 1,482 2,566 3,868

Deferred income tax liabilities (17) 1,036 864 893

Provisions for other liabilities and charges (18)/(19) 313 345 2,632

2,831 3,775 7,393

Current liabilities

Trade and other payables (20) 19,852 21,971 14,932

Current income tax liabilities 1,381 2,398 121

Borrowings (16) 3,264 5,175 8,820

Provisions for other liabilities and charges (18) 25 45 363

Total liabilities 27,353 33,364 31,629

Total equity and liabilities 79,910 79,931 46,252





Consolidated Statement of Income

Year Ended December 31,


Revenue (5) 86,554 74,578 35,138

Cost of sales (21) (60,577) (53,918) (26,905)

Gross profit 25,977 20,660 8,233

Selling and marketing expenses (22) (2,843) (2,543) (1,449)

General and administrative expenses (22) (7,055) (5,412) (3,585)

Other operating income/(expense), net (21)/(22) (180) (291) 23

Share‑based compensation granted as part of the IPO (22)/(24) — (983) —

Share of profit/(loss) from associates (22)/(8) — 69 75

Operating profit 15,899 11,500 3,297

Finance (costs) / profits (24) 72 (771) (474)

Profit before income tax 15,971 10,729 2,823

Income tax expense (25) (5,556) (4,231) (656)

Profit for the year 10,415 6,498 2,167

Attributable to:

Equity holders of the Company 10,355 6,439 2,252

Minority interest 60 59 (85)

10,415 6, 498 2,167

Earnings per share for profit attributable to the equity holders of the Company during the year

(expressed in € per share)

— basic (27) 0.18 0.13 0.05

— diluted (27) 0.18 0.13 0.05





Consolidated Statement of Changes in Equity

In thousands of € Attributable to Equity Holders of the CompanyMinority Interest

Total Equity

Share

Capital

Share Premium and

Retained Earnings

Other Reserves

(see Note 15) Total

Balance at January 1, 2006 657 13,414 (749) 13,322 210 13,532

Currency translation differences — — (107) (107) — (107)

Cash flow hedges, net of tax — — 72 72 — 72

Actuarial gains/(losses), net of tax — — (426) (426) — (426)

Net income/(loss) recognized directly in equity — — (461) (461) — (461)

Profit for the year — 2,252 — 2,252 (85) 2,167

Total accumulated recognized income and expense for 2006 — 2,252 (461) 1,791 (85) 1,706

Dividend paid relating to 2005 — (602) — (602) (13) (615)

Balance at December 31, 2006 657 15,064 (1,210) 14,511 112 14,623

Balance at January 1, 2007 657 15,064 (1,210) 14,511 112 14,623

Currency translation differences — — 143 143 — 143

Pension plan settlement – Reorganization program (Note 22) — (793) 793 — — —

Actuarial gains/(losses), net of tax — — (108) (108) — (108)

Employee share‑based compensation (Note 23) — — 1,082 1,082 — 1,082

Net income/(loss) recognized directly in equity 657 14,271 700 15,628 112 15,740

Profit for the year — 6,439 — 6,439 59 6,498

Total accumulated recognized income and expense for 2007 657 20,710 700 22,067 171 22,238

Share Capital increase (Note 14) 254 24,677 — 24,931 — 24,931

Dividend declared relating to 2006 — (602) — (602) — (602)

Balance at December 31, 2007 911 44,785 700 46,396 171 46,567

Balance at January 1, 2008 911 44,785 700 46,396 171 46,567

Currency translation differences — — (2,355) (2,355) — (2,355)

Employee share‑based compensation (Note 23) — — 356 356 — 356

Net income/(loss) recognized directly in equity 911 44,785 (1,299) 44,397 171 44,568

Profit for the year — 10,355 — 10,355 60 10,415

Total accumulated recognized income and expense for 2008 911 55,140 (1,299) 54,752 231 54,983

Treasury shares purchased (Note 14) — (3,416) — (3,416) — (3,416)

Transfer of shares in connection with acquisition of subsidiaries, net of

tax (Note 7) — 1,849 — 1,849 — 1,849

Dividend declared relating to 2007 — (815) — (815) (42) (857)

Balance at December 31, 2008 911 52,756 (1,299) 52,368 189 52,557

Note: The Company presents in Note 14 the “Statement of Recognized Income and Expense” and the related changes in “Other reserves”.





Consolidated Statement of Cash Flow Year Ended December 31,

In thousands of € Note 2008 2007 2006Cash flows from operating activities

Profit for the year 10,415 6,498 2,167

Adjustments for:

Depreciation, amortization and impairment (21) 5,917 5,147 2,646

Changes in non‑current portion of provisions and other liabilities (348) 91 301

(Gain)/loss on sale and disposal of assets (21) 17 (61) (40)

Share of (profit)/loss from associates (8) — (69) (75)

Changes in items recognized directly in equity with an impact on (i) the profit for the year or (ii) cash and cash equivalent (13)/(14) — 322 (292)

Non‑cash share‑based compensation expenses (23) 356 1,082 —

Non‑cash reorganization program impact (22) — 312 —

Income taxes expense (25) 5,556 4,231 656

Finance costs, net (22) (72) 771 474

Cash generated from operations before changes in operating assets and liabilities 21,841 18,324 5,837

Changes in operating assets and liabilities:

Inventories (1,719) (942) (2,547)

Trade accounts receivable and other receivable 2,669 (2,957) (2,292)

Trade accounts payable and other payable (4,964) 4,149 1,034

Cash generated from operations 17,827 18,574 2,032

Interest paid 192 (934) (390)

Income tax paid (3,774) (1,215) (815)

Net cash flow from operating activities 14,245 16,425 827

Cash flows from investing activities

Purchase of Property and equipment (PE) and intangible assets(*) (6) (12,197) (7,098) (3,096)

Acquisition of the net assets of Northwest Sequoia Drilling Ltd(**) (7) (4,322) — —

Acquisition of the net assets of Connors Drilling Ltd (7) 101 (6,566) —

Deposit on escrow account relating to Connors acquisition (7) 735 (735) —

Purchase price adjustment (374) — —

Proceeds from sale of PE 30 90 49

Dividends received (8) — 144 120

Changes in other non‑current assets — (16) (36)

Net cash used in investing activities (16,027) (14,181) (2,963)

Cash flows from financing activities

Proceeds from the IPO, net of issuance expenses (14) — 23,910 —

Acquisition of treasury shares (14) (3,416) — —

Repayments of borrowings (14) (1,857) (10,873) (1,696)

Proceeds from issuance of borrowings (7) 133 8,731 1,390

Net increase/(decrease) in bank overdrafts and short‑term loans (1,393) (2,974) 2,463

Dividends paid to Company’s shareholders (28) (815) (1,127) (77)

Dividends paid to minority interests (15) (42) — (13)

Net cash used in financing activities (7,390) 17,667 2,067

Exchange differences in cash and cash equivalents (37) 40 —

Net increase/(decrease) in cash and cash equivalents (9,209) 19,951 (69)

Cash and cash equivalents at beginning of the year (13) 23,264 3,313 3,382

Cash and cash equivalents at the end of the year (13) 14,055 23,264 3,313

(*) Excluding acquisition financed through finance leases — — 2,470

(**) Excluding portion of purchased price financed through treasury shares 1,460 — —





Notes to the Consolidated Financial Statements

1. GENERAL INFORMATIONForaco International SA (the Company) and its subsidiaries (together, the Group or Foraco Group) trade mainly in the

mining, geological and hydraulic drilling sectors.

The principle sources of revenue consist of drilling contracts for companies primarily involved in mining, water and

mineral exploration. The Company has operations in Africa, Europe, the Americas and Asia Pacific.

The Company is a “société anonyme” incorporated in France. The address of its registered office is 26, plage de

l’Estaque, 13016 Marseille, France.

These consolidated financial statements were authorized for issue by the Board of Directors on March 30, 2009.

The Company is listed on the Toronto Stock Exchange (TSX) under the symbol “FAR”.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

These policies have been consistently applied to all periods presented, unless otherwise stated.

2.1 Basis of PreparationThe consolidated financial statements of Foraco Group have been prepared in accordance with International Financial

Reporting Standards (IFRS).

The consolidated financial statements have been prepared under the historical cost convention, as modified by the

revaluation assets financial at fair value (financial assets at fair value through profit or loss).

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting

estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting

policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are

significant to the consolidated financial statements are disclosed in Note 3.

Except otherwise stated, all amounts are presented in thousands of €.

New standards and interpretations applicable to future reporting periods which the Company early adopted in 2008 and that do not have material impact on the Company’s financial statements:

IAS 23, Borrowing cost – revised (effective on or after January 1, 2009) and IAS 23 (Amendment), Borrowing •

costs (effective from January 1, 2009) require the capitalization of borrowing costs.

IFRS 2 (Amendment), Share‑based payment (effective from January 1, 2009). The amended standard deals with •

vesting conditions and cancellations of plans.

IAS 36 (Amendment), Impairment of assets (effective from January 1, 2009). Under this amendment, where fair •

value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for

value‑in‑use calculation should be made.

New standards and interpretations applicable to future reporting periods which the Company early adopted in 2008 and that are not relevant to the Company’s operations:

IFRS 1 (Amendment) First time adoption of IFRS and IAS 27 Consolidated and separate financial statements •

(effective from January 1, 2009).

IFRS 5 (Amendment), Non‑current assets held for sale and discontinued operations (and consequential •

amendment to IFRS 1, First‑time adoption) (effective from July 1, 2009).

IAS 1 (Amendment), Presentation of financial statements (effective from January 1, 2009).•

28 Notes to Consolidated Financial Statements

2.1 Basis of Preparation (cont’d)IAS 16 (Amendment), Property, plant and equipment (and consequential amendment to IAS 7, Statement of cash •

flows) (effective from January 1, 2009).

IAS 19 (Amendment), Employee benefits (effective from January 1, 2009). •

IAS 20 (Amendment), Accounting for government grants and disclosure of government assistance (effective from •

January 1, 2009).

IAS 27 (Amendments), Consolidated and separate financial statements (effective from January 1, 2009). •

IAS 28 (Amendment), Investments in associates (and consequential amendments to IAS 32, Financial •

Instruments: Presentation and IFRS 7, Financial instruments: Disclosures) (effective from January 1, 2009).

IAS 29 (Amendment), Financial reporting in hyperinflationary economies (effective from January 1, 2009). •

IAS 31 (Amendment), Interests in joint ventures (and consequential amendments to IAS 32 and IFRS 7) (effective •

from January 1, 2009).

IAS 32 (Amendments), Financial instruments: Presentation, and IAS 1 (Amendment), Presentation of financial •

statements – Puttable financial instruments and obligations arising on liquidation (effective from January 1, 2009).

IAS 38 (Amendment), Intangible assets, (effective from January 1, 2009). •

IAS 39 (Amendments), Financial instruments: Recognition and measurement (effective from January 1, 2009). •

IAS 40 (Amendment), Investment property (and consequential amendments to IAS 16) (effective from •

January 1, 2009).

IAS 41 (Amendment), Agriculture (effective from January 1, 2009). •

IFRIC 15, Agreements for construction of real estates (effective from January 1, 2009).•

IFRIC 16, Hedges of a net investment in a foreign operation (effective from October 1, 2008).•

New standards effective in future reporting periods which the Company did not early adopt in 2008 and for which the Company is currently assessing the potential effect:

IFRS 8, Operating segments (effective for annual periods beginning on or after January 1, 2009): IFRS 8 replaces •

IAS 14, Segment Reporting and requires an entity to report financial and descriptive information about its report‑

able segments. IFRS 8 differs in certain areas from IAS 14 such as in the identification of operating segments

based on internal reports that are regularly reviewed by the management in order to allocate resources to the

segment and assess its performance. The Company is currently assessing the effect of the adoption of IFRS 8

and is not expecting any material change to the segment reporting disclosure.

IAS 1 (Revised), Presentation of financial statements (effective from January 1, 2009). The revised standard will •

prohibit the presentation of items of income and expenses (that is, non‑owner changes in equity) in the statement

of changes in equity, requiring non‑owner changes in equity to be presented separately from owner changes in

equity. All non‑owner changes in equity will be required to be shown in a performance statement, but entities can

choose whether to present one performance statement (the statement of comprehensive income) or two state‑

ments (the income statement and statement of comprehensive income).

IAS 27 (Revised), Consolidated and separate financial statements (effective from July 1, 2009).The revised stan‑•

dard requires the effects of all transactions with non‑controlling interests to be recorded in equity if there is no

change in control and these transactions will no longer result in goodwill or gains and losses.

IFRS 3 (Revised), Business combinations (effective from July 1, 2009). The revised standard continues to apply •

the acquisition method to business combinations, with some significant changes notably regarding the treatment

of contingent payments and the accounting for acquisition related costs.


2.2 Consolidation

(a) SubsidiariesSubsidiaries are all entities over which the Company has the power to govern the financial and operating policies

generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of

potential voting rights that are currently exercisable or convertible are considered when assessing whether the

Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred

to the Company. They are de‑consolidated from the date that control ceases.

The Company uses the purchase method of accounting to account for the acquisition of subsidiaries.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and

liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are

measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

The excess of the cost of acquisition over the fair value of the Company’s share of the identifiable net assets

acquired is recorded as goodwill (see Note 7).

Inter‑company transactions, balances and unrealized gains on transactions between group companies

are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency

with the policies adopted by the Company.

The Company applies a policy of treating transactions with minority interests as transactions with parties

external to the Company. Disposals to minority interests result in gains and losses for the Company and are

recorded in the income statement. Purchases from minority interests result in goodwill, being the difference

between any consideration paid and the relevant share acquired of the carrying value of net assets of the

subsidiary.

(b) AssociatesAssociates are all entities over which the Company has significant influence, but not control, generally with a

shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the

equity method of accounting and are initially recognized at cost.

The Company’s investment in associates includes goodwill (net of any accumulated impairment loss)

identified on acquisition.

The Company’s share of its associates post‑acquisition profits or losses is recognized in the statement

of income, and its share of post‑acquisition movements in reserves is recognized in reserves. The cumulative

post‑acquisition movements are adjusted against the carrying amount of the investment. When the Company’s

share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured

receivables, the Company does not recognize further losses, unless it has incurred obligations or made payments

on behalf of the associate.

Unrealized gains on transactions between the Company and its associates are eliminated to the extent of

the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides

evidence of an impairment of the asset transferred.

Accounting policies of associates have been changed where necessary to ensure consistency with the

policies adopted by the Company.

2.3 Segment ReportingA business segment is a group of assets and operations engaged in providing products or services that are subject to

risks and returns that are different from those of other business segments. A geographical segment is engaged in providing

products or services within a particular economic environment that are subject to risks and returns that are different from

those of segments operating in other economic environments. Segment reporting disclosures are provided in Note 5.


2.4 Foreign Currency

(a) Functional and Presentation CurrencyItems included in the consolidated financial statements of each of the Group’s entities are measured using the currency

of the primary economic environment in which the entity operates (“the functional currency”). The consolidated

financial statements are presented in €, which is Foraco International functional and presentation currency.

(b) Transactions and BalancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at

the dates of the transactions. The exchange rates prevailing at the dates of the transactions are approximated by

a single rate per currency for each month (unless these rates are not reasonable approximations of the cumulative

effect of the rates prevailing on the transaction dates). Foreign exchange gains and losses resulting from the

settlement of such transactions and from the translation at year‑end exchange rates of monetary assets and

liabilities denominated in foreign currencies are recognized in the statement of income.

(c) Group CompaniesNone of the Company’s entities has the functional currency of a hyperinflation economy.

The results and financial position of all the Group entities that have a functional currency different from the

presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that

balance sheet;

(ii) income and expenses for each statement of income are translated at a monthly average exchange rate

(unless this rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the

transaction dates, in which case income and expenses are translated at the dates of the transactions); and

(iii) all resulting exchange differences are recognized as a separate component of equity within “Other reserves”.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and

liabilities of the foreign entity and are translated at the closing rate.

2.5 Property and EquipmentProperty and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly

attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as

a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to

the Group and the cost of the item can be measured reliably. Major refurbishment work and improvements are capitalized,

while repairs and maintenance are expensed as incurred.

Borrowing costs are capitalized as part of the cost of property and equipment. There was no borrowing cost

capitalized over the periods presented.

Depreciation of property and equipment is calculated using the straight‑line method to allocate their cost to their

residual values over their estimated useful life (Note 6).

The useful lives are as follows:

Buildings 10 years

Drills 5 to 10 years

Compressors 5 years

Other drilling equipment 1 to 3 years

Automotive equipment 3 to 4 years

Office equipment and furniture 2 to 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

When the Company leases assets under the terms of a long‑term contract or other agreements that substantially

transfer all of the risks and rewards of ownership to the Company, the value of the leased property is capitalized and

depreciated (as described above) and the corresponding obligation is recorded as a liability within borrowings.

When the recoverable amount of an asset is less than its carrying amount, the corresponding impairment loss is

provided for (see Note 2.7).


2.6 Intangible Assets

(a) GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the

net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions

of subsidiaries is presented on the consolidated balance sheet under the line item “Goodwill”. Goodwill on

acquisitions of associates is included in investments in associates. Goodwill is carried at cost less accumulated

impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating

to the entity sold.

Goodwill is tested at least annually for impairment.

(b) Development CostsCosts incurred on development projects (relating to the design and the testing of a new drilling process) are

recognized as intangible assets when they met IAS 38 recognition criteria. They are amortized from the point of

which the asset is ready for use on a straight‑line basis over 5 years.

(c) TrademarksAcquired trademarks are shown at acquisition cost. Trademarks have a finite useful life and are carried at cost less

accumulated amortization. In the context of the acquisition of the Canadian operations of Connors Drilling Ltd.,

the right to use the trademark “Connors” has been granted to the Company for a 20‑month period. Amortization

of the Connors trademark is calculated using the straight‑line method over its estimated useful life of 20 months.

Trademarks are presented within “Other intangible assets”.

(d) Customer RelationshipsCustomer relationships correspond to order backlog and customer contracts recognized in the context of

business combination at the date of acquisition. For each component of customer contractual relationships,

(i) a signed drilling contract, (ii) an expected revenue and (iii) an expected margin, are identified. Following

the date of acquisition when the corresponding drilling contract starts, the customer contractual relationship

identified at the date of acquisition and recognized as an intangible asset is credited to cost of sales so as to

amortize the intangible asset based on the revenue earned. When applicable, an impairment test is performed

if the drilling contract is no longer likely to occur, or if the expected profitability of a given future transaction is

lower than anticipated. As of December 31, 2008 customers’ relationships acquired in 2007 have been fully

amortized to the statement of income.

2.7 Impairment of Non-Financial AssetsAssets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually

for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount

by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s

fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest

levels for which there are separately identifiable cash flows (cash‑generating units). Non‑financial assets other than goodwill

that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.8 Financial AssetsLoans and receivables are non‑derivative financial assets with fixed or determinable payments that are not quoted in

an active market. They are included in current assets, except for maturities greater than 12 months after the balance

sheet date. Loans and receivables originated by the Company are included in trade and other current receivables in the

consolidated balance sheet.

Financial assets at fair value through profit or loss are non‑derivative financial assets that are designated in this

category. Financial assets at fair value through profit or loss are carried at fair value with changes in fair value recognized

in the statement of income.

The Group does not hold any available‑for‑sale financial assets nor held‑to‑maturity investments over the

period presented.


2.9 Derivative Financial Instruments and Hedging ActivitiesThe Group does not hold any derivative financial instruments over the period presented.

2.10 Operating LeaseLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as

operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to

the statement of income on a straight‑line basis over the period of the lease.

2.11 InventoriesThe Company maintains an inventory of operating supplies and drill consumables such as bits additives and chucks.

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the average weighted

unit cost method. It excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of

business, less applicable variable selling expenses.

2.12 Revenue RecognitionRevenue comprises the fair value of the consideration received or receivable for services in the ordinary course of the

Company’s activities. Revenue is shown net of value‑added tax, returns, rebates and discounts and after eliminating sales

within the Company.

Drilling works are periodically approved by customers. Accordingly, revenues and receivables are accounted for when

services have been approved. The amount of revenue is not considered to be reliably measurable until all contingencies

relating to services rendered have been resolved. Contracts in progress at the closing date are accounted for using the

percentage of completion method whereby revenues and directly attributable costs are recognized in each period based

on the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs.

When the global income from a contract cannot be reliably estimated, no gross profit is recognized during

the period.

Under either of the policies mentioned above, when it is probable that total contract costs will exceed total contract

revenue, the expected loss is recognized as an expense immediately. This loss is equal to the total estimated loss on the

project less the loss already accounted for and is first applied against the project’s receivables. Any excess is then credited

to provisions.

2.13 Trade ReceivablesTrade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective

interest method, less provision for impairment. A provision for impairment of trade receivables is established on a case

by case basis when there is objective evidence that the Company will not be able to collect all amounts due according to

the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and

the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is

recognized in the statement of income.

The Company transfers certain receivables by way of assignment. As risks and rewards related to the trade

receivables have been retained by the Group, accounts receivable are not derecognized and a financial liability is accounted

for against the consideration received from the lenders.

2.14 Cash and Cash EquivalentsCash and cash equivalents include cash in hand, current deposits, other current highly liquid investments with original

maturities of three months or less. Bank overdrafts are shown within current liabilities on the consolidated balance sheet.

The Company owns certain highly liquid securities based on the € currency market. These investments are classified

as financial assets at fair value through profit or loss.


2.15 Share CapitalOrdinary shares are classified as equity. The Group did not issue any preference shares.

Incremental costs directly attributable to the issue of new shares are recognized in equity as a deduction from the

proceeds, net of tax.

Where any Company subsidiary purchases the Company’s equity share capital (treasury shares), the consideration

paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the

Company’s equity holders until the shares are cancelled or transferred. When such shares are subsequently transferred,

any consideration received, net of any directly attributable incremental transaction costs and the related income tax

effects, are included in equity attributable to the Company’s equity holders.

2.16 BorrowingsBorrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at

amortized cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognized in

the statement of income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the

liability for at least 12 months after the balance sheet date.

2.17 Income TaxThe tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to

the extent that it relates to items recognized directly in equity. In this case, the tax is also recognized in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the

balance sheet date and is calculated at the level of each country where the Company’s subsidiaries and associates

operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to

situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on

the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax

bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred

income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at

the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax

is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and

are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available

against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates,

except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the

temporary difference will not reverse in the foreseeable future.

2.18 ProvisionsProvisions for customer and warranty claims, legal claims and litigation are recognized when:

the Company has a present legal or constructive obligation as a result of past events;•

it is more likely than not that an outflow of resources will be required to settle the obligation; and•

the amount has been reliably estimated.•

The Group evaluates outflows of resources expected to be required to settle the obligation based on facts and

events known at the closing date, from its past experience and to the best of its knowledge. Provisions are measured

at the present value of the expenditures expected to be required to settle the obligation using a rate that reflects current

market assessments of the time value of money and the risks specific to the obligation.


2.19 EmployeeBenefits

(a) Pension ObligationsThe Group mainly provides to its employees defined contribution plans. A defined contribution plan is a pension

plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive

obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits

relating to employee service in the current and prior periods. A defined benefit plan, such as the mandatory

retirement plan in France, is a pension plan that is not a defined contribution plan. Typically, defined benefit plans

define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or

more factors such as age, years of service and compensation.

The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value

of the defined benefit obligation at the balance sheet date less the fair value of plan assets (if any), together with

adjustments for unrecognized past service costs. The defined benefit obligation is calculated annually using the

projected unit credit method. The present value of the defined benefit obligation is determined by discounting

the estimated future cash outflows using interest rates of high‑quality corporate bonds that are denominated in

the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the

related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are

recognized outside the statement of income and are presented in equity under the caption “Other reserves” in

the period in which they arise. Actuarial gains and losses are presented in the statement of recognized income

and expense (SoRIE). Changes in amounts recognized directly within “Other reserves” are presented in the

consolidated statement of changes in equity and detailed in Note 14.

For defined contribution plans, the Company pays contributions to publicly or privately administered

pension insurance plans on a mandatory, contractual or voluntary basis. The Company has no further payment

obligations once the contributions have been paid. The contributions are recognized as employee benefit

expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or

a reduction in the future payments is available.

The Company does not provide other post‑employment benefits.

(b) Bonuses and Profit-SharingThe Company recognizes a liability and an expense for bonuses and profit‑sharing. The Company recognizes a

provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(c) Share-Based CompensationThe fair value of the employee or third party services received in exchange for the grant of equity instruments is

recognized as an expense, with a corresponding adjustment to equity. The total amount to be expensed over the

vesting period is determined by reference to the fair value of the equity instrument granted, once determined at

grant date. The plans operated by the Company do not include any market vesting conditions. At each balance

sheet date, the Company revises its estimates of the number of shares and other equity instruments that are

expected to vest. The Company recognizes the impact of the revision of original estimates, if any, in the statement

of income.

The proceeds received net of any directly attributable transaction costs are credited to share capital

(nominal value) and share premium when the options are exercised.

2.20 Trade PayablesThe trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective

interest method.


2.21 Earnings Per ShareBasic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted

average number of ordinary shares in issue during the year. Diluted earnings per share are computed by dividing net

income attributable to equity holders of the Company by the weighted average number of shares outstanding, adjusted

for the effects of all dilutive potential ordinary shares.

As part of its Initial Public Offering, the Company has issued certain dilutive equity instruments during the year 2007

(see Note 14 and 23).

A reconciliation of the weighted average number of ordinary shares outstanding during the period and the weighted

average number of shares outstanding, adjusted for the effects of all dilutive potential ordinary shares, is presented in

Note 27.

3. FINANCIAL RISK MANAGEMENTThe Group is exposed to a variety of financial risks through its activity: currency risk, interest rate/re‑investment risk, financial

counter‑party risk and credit risk. The Company’s overall risk management program focuses on the unpredictability of

financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.

The Company’s cash investment strategy aims to not take capital risks and reach a global performance level

equivalent to the reference free risk interest rate on the € currency market. In order to achieve this objective, the Company

contracts certain short term deposits offering guaranteed capital with or without guaranteed interest rate yield.

3.1 Company’s Risk Exposure

(a) Currency RisksThe Group operates worldwide and is therefore exposed to foreign exchange risk on its commercial transactions.

Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities. Financial

assets and liabilities are mainly denominated in € currency.

For operations located in Africa, main operating costs are denominated in € or CFA francs, for which the

exchange rate with the € is fixed.

Since 2007, a significant portion of the Company’s cash flow is now denominated in Canadian $. Revenue

denominated in Canadian dollars represented 32%, 34% and 1% as a percentage of Company’s revenue in the

years ended December 31, 2008, 2007 and 2006, respectively. This exposure is mitigated as all related costs are

also generated in Canadian $.

The sensitivity to Canadian $ against € fluctuations of the consolidated revenue and the consolidated

profit for the year presented in € is summarized as follows (in thousands of €):

As of December 31, 2008

Fluctuation in Canadian $ / € exchange rate +5% -5%

Revenue(1) 1,293 (1,293)

Profit for the year(1) 151 (151)

As of December 31, 2007

Fluctuation in Canadian $ / € exchange rate +5% ‑5%

Revenue(1) 1,114 (1,114)

Profit for the year(1) 109 (109)(1) Estimated effect on the translation into € for consolidation purposes of foreign operations having the Canadian dollar as functional currency

based on the weighted average rate of the period .


3.1 Company’s Risk Exposure (cont’d)

(b) Interest Rate RiskThe Company owns certain interest‑bearing assets (short term deposit) classified as cash and cash equivalent.

However, the Company’s income and operating cash flows are substantially independent of changes in market

interest rates as the Company has invested in highly liquid deposits with guaranteed nominal value.

The sensitivity to variable interest rate of short term deposits held by the Group is presented below (in

thousands of €):

As of December 31,

2008 2007 2006

Average amount of cash and cash equivalent over the period 18,758 9,198 893

Increase in financial income following a 50 b.p. increase 94 46 4

Decrease in financial income following a 50 b.p. decrease (94) (46) (4)

For the purpose of this analysis, the average cash equivalent has been defined as the arithmetical average

between the opening and the closing position at each reporting date.

On the financial liabilities, the Company is not significantly exposed to risks relating to the fluctuations of

interest rates as main financing sources bear interest at a fixed rate.

(c) Financial Counter-Party RiskAll significant cash and cash equivalents and deposits with banks and financial institutions are undertaken with

major financial institutions having an investment grade rating. These top‑tier financial institutions are:

Société Générale;•BNP Paribas;•Crédit Agricole group; •Crédit Mutuel group; and•Banques Populaires.•

(d) Concentration of Credit RiskThe Company assesses the credit quality of the customer, taking into account its financial position, past

experience and other factors. Individual risk limits are set for each subsidiary. The utilization of credit limits is

regularly monitored.

The Company’s broad geographical and customer distribution limits the concentration of credit risk.

One customer accounted for approximately 10% of the Company’s sales during the year ended December 31, 2008

(one client accounted for 14% of revenue in 2007), no other client accounting for more than 10%. No other single

customer accounted for more than 10% of the Company’s sales during the years ended December 31, 2008,

2007 and 2006.

(e) Liquidity RiskPrudent liquidity risk management implies maintaining sufficient cash and cash equivalents and short term

deposit, the availability of funding through an adequate amount of committed credit facilities and the ability to

close out market positions. Due to the dynamic nature of the underlying businesses, management maintains

flexibility in funding by maintaining availability under committed credit lines.

The maturity analysis for financial liabilities is presented in Note 16.

(f) Country RiskThe expansion into new geographic areas via acquisitions brings geographic and currency risks. Some of

the company’s locations in Africa are undergoing industrialization and urbanization and as such do not have

the economic, political or social stability that many developed nations now possess. There is a risk that the

operations, assets, employees or repatriation of revenues could be impaired by factors specific to the regions in

which the Company operates.

The Company manages its country risk through a number of risk measures and limits, the most important

being the regular review of geopolitical conditions and an effective monitoring of liquidity, inventories and

equipment potential exposure.


3.2 Estimation of Fair Value of Financial Assets and LiabilitiesThe fair value of financial instruments traded in active markets (such as publicly marketable securities) is based on quoted

market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current

bid price; the appropriate quoted market price for financial liabilities is the current asking price.

Since 2006, the Company did not hold derivative financial instruments that are not traded in an active market

(for example, over‑the ‑counter derivatives).

The carrying amount of trade receivables less impairment provision and trade payables are assumed to approximate

their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual

cash flows at the current market interest rate that is available to the Group for similar financial instruments (see Note 16).

3.3 Financial Instruments by Category

December 31, 2008Loans and

receivables

Assets at fair value

through the profit and loss

Derivatives used for hedging

Available-for-sale Total

Assets as per balance sheet

Trade and other receivables 19,219 — — — 19,219

Cash and cash equivalents 3,450 10,605 — — 14,055

Total 22,669 10,605 — — 33,274

Liabilities at fair value through the

profit and loss


Other financial liabilities Total

Liabilities as per balance sheet

Borrowings — — 4,746 4,746

Trade and other payables — — 21,233 21,233

Total — — 25,979 25,979


receivables






Trade and other receivables 22,001 — — — 22,001

Cash and cash equivalents 5,450 17,814 — — 23,264

Total 27,451 17,814 — — 45,265


profit and loss




Borrowings — — 7,741 7,741


Total — — 32,110 32,110


receivables






Trade and other receivables 17,775 — — − 17,775

Cash and cash equivalents 2,410 — — 903 3,313

Total 20,185 — — 903 21,088


3.3 Financial Instruments by Category (cont’d)


profit and loss




Borrowings — — 12,688 12,688


Total — — 27,741 27,741

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSThe preparation of consolidated financial statements in conformity with IFRS requires management to make certain

estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets

and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses

during the reporting period. Estimates are used for, but not limited to, the accounting of doubtful accounts, depreciation,

amortization and impairment, income taxes, share‑based payment expenses and contingencies. Actual results could differ

from these estimates.

Estimates and judgments are continually evaluated and are based on historical experience and other factors,

including expectations of future events that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will,

by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing

a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

4.1 Impairment of GoodwillThe Company tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy

stated in Note 2. The recoverable amounts of cash‑generating units have been determined based on value‑in‑use

calculations. These calculations require the use of estimates (see Note 7). No impairment charge has been recognized

over periods presented.

As at December 31, 2008 the goodwill is allocated to the business segment as follows:

Mining activity 7,078

Water activity 1,516

Total goodwill as at December 31, 2008 8,594

The Group would have not recognized any additional impairment of goodwill if:

the budgeted operating profit for 2009, 2010 and 2011 used in the value‑in‑use calculation for the Mining activity •

had been 20% lower than management’s estimates;

the budgeted operating profit for 2009, 2010 and 2011 used in the value‑in‑use calculation for the Water activity •

had been 20% lower than management’s estimates; and

the estimated pre‑tax discount rate applied to the discounted cash flows for the Mining and Water activity had •

been 200 b.p. higher than management’s estimates.

4.2 Depreciation of Property and Equipment Equipment is often used in a hostile environment and may be subject to accelerated depreciation. Management considers the

reasonableness of useful lives and whether known factors reduce or extend the lives of certain assets. This is accomplished

by assessing the changing business conditions, examining the level of expenditures required for additional improvements,

observing the pattern of gains or losses on disposition, and considering the various components of the assets.


4.3 Spare Parts and Slow Moving Spare parts relate to equipment which may be used in a hostile environment. Management assesses the level of provision

for spare parts together with its review of the equipment as described above.

4.4 Contracts in Progress The Company records its profit and its revenue based on the percentage‑of‑completion method. Key aspects of the

method are the determination of the appropriate extent of progress towards completion and the assessment of the

margin to be generated. Management follows the contracts in progress and their related margins on a monthly basis.

On occasions the finance and control department performs on site controls.

4.5 Income TaxesThe Group is subject to income taxes in numerous jurisdictions. Judgment is required in determining the worldwide

provision for income taxes. There are certain transactions and calculations for which the ultimate tax determination is

uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit issues based

on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the

amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period

in which such determination is made.

4.6 Share-Based Payment TransactionsThe fair value of share‑based payment transactions is based on certain assumptions from management. The main area of

estimates relates to the determination of the fair value of equity instruments granted:

for warrants, it concerns the estimated volatility and expected maturity of the instrument;•

for free shares, the main assumption used in the determination of the share‑based payment expense is the turn‑•

over assumption retained to assess the number of equity instruments that are expected to vest.

Details of share‑based compensations are disclosed in Note 23.

4.7 Determination of the Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations

The assessment of the fair value of assets acquired and liabilities assumed in business combinations is based on different

valuation techniques and management best estimates. Main areas of judgment relate to the valuation of equity instruments

included in the purchase consideration paid, the identification and the valuation of intangible assets acquired and the

determination of the market value of equipment acquired.

5. SEGMENT INFORMATIONThe Company’s management makes decisions about resources to be allocated to the segments and assesses their

performance using an analysis from revenues to operating profit for business segments and sales for geographical

segments. The Company does not identify or allocate assets, liabilities or cash flows to group’s segments nor does

management evaluate the segments on this criteria on a regular basis.


5.1 Primary Reporting Format — Business SegmentsAs at December 31, 2008, the Group is organized on a worldwide basis into two main business segments.

The “Mining & Energy” segment (referred to hereafter as “Mining” segment) covers drilling services offered to the

mining and energy industry during the exploration, development and production phases of mining projects.

The “Water, Environment & Infrastructure” segment (referred to hereafter as “Water” segment) covers all activities

linked to the construction of water wells leading to the supply of drinking water, the collection of mineral water, as well as

the control, maintenance and renovation of the existing installations. This segment also includes drilling services offered to

the environmental and construction industry such as geological exploration and geotechnical drilling.

The accounting policies of the segments are substantially the same as those described in the summary of significant

accounting policies as discussed in Note 2.

The business segment information for the year ended December 31, 2008, 2007 and 2006 was as follows:

Year ended December 31, 2008 Water Mining Company

Revenue 20,256 66,298 86,554


Finance (costs) / profits — — 72

Profit before income tax — — 15,971

Income tax expense — — (5,556)

Profit for the year — — 10,415


Revenue 20,631 53,946 74,578


Finance (costs) / profits — — (771)


Income tax expense — — (4,231)



Revenue 21,553 13,585 35,138


Finance (costs) / profits — — (474)


Income tax expense — — (656)


There is no inter‑segment revenue. Corporate costs and overheads are allocated to each business segment.

5.2 Secondary Reporting Format — Geographical SegmentsThe Company operates in four main geographical areas, even though the business is managed on a worldwide basis.

The following is a summary of sales to external customers by geographic area for the year ended December 31,

2008, 2007 and 2006:

December 31,

2008 2007 2006

Africa 44,757 35,254 23,968

Europe 6,453 7,550 4,702

Asia Pacific 7,662 6,751 5,898

Americas 27,683 25,023 570

Revenue 86,554 74,578 35,138


5.2 Secondary Reporting Format — Geographical Segments (cont’d) Revenues from external customers are based on the customers’ billing location. Accordingly, there are no sales

transactions between operating segments. The Company does not allocate non‑current assets by location for each

geographical area.

6. PROPERTY AND EQUIPMENTProperty and equipment consists of the following:

Land &

Buildings

Drilling Equipment

& ToolsAutomative Equipment

Office Furniture

& Other Equipment Total

Year ended December 31, 2006

Opening net book amount 1,179 5,547 1,055 142 7,923

Additions 273 4,718 1,167 68 6,226

Disposals or retirements — (35) (57) (1) (93)

Depreciation charge (79) (1,771) (732) (64) (2,646)

Closing net book amount at December 31, 2006 1,373 8,459 1,434 144 11,411

Cost or valuation 1,889 18,872 3,995 924 25,679

Accumulated depreciation (516) (10,413) (2,561) (779) (14,269)

Net book amount 1,373 8,459 1,434 144 11,411



Additions 123 5,766 1,062 147 7,098

Exchange differences 60 118 — 4 182

Disposals or retirements (581) — — — (581)

Acquisition of subsidiary (Note 7) 913 1,577 74 12 2,576

Depreciation charge (135) (3,459) (688) (81) (4,363)


Cost 2,404 26,333 5,131 1,087 34,955


Net book amount 1,753 12,461 1,882 227 16,323



Additions 487 7,938 3,098 149 11,673

Exchange differences (147) (646) (23) (1) (817)

Disposals or retirements — — (48) — (48)

Acquisition of subsidiary (Note 7) — 1,706 — — 1,706

Depreciation charge (116) (4,509) (1,011) (107) (5,743)


Cost 2,744 35,331 8,158 1,234 47,467


Net book amount 1,977 16,950 3,898 267 23,094

Including PPE under finance lease:

Cost 3,657 1,133 4,790

Accumulated depreciation (2,364) (924) (3,288)

Net book value of PPE under finance lease 1,293 209 1,502


6. PROPERTY AND EQUIPMENT (cont’d)Depreciation expense has been charged to statement of income as follows:

December 31,

2008 2007 2006

Cost of sale 5,834 5,102 2,606

General & administrative expenses 83 45 40

Total depreciation and amortization 5,917 5,147 2,646

of which for property and equipment 5,743 4,363 2,646

of which for intangible assets 174 784 —

Lease rentals amounting to €794 thousand (€962 thousand in 2007 and €804 thousand in 2006) relating to the

usual rental of equipment and building are included in the statement of income.

Assets under construction amounted to €2,263 thousand as of December 31, 2008, €1,675 thousand as of

December 31, 2007 and €1,369 thousand as of December 31, 2006.

The net book value as of December 31, 2008 of property and equipment pledged as a security of borrowing

amounted to €4,618 thousand.

In 2004, the Company has internally developed a drilling technique (Air Jet) for New Caledonian projects.

The development costs capitalized for this project amounted to €350 thousand and were depreciated on a straight‑

line basis over 5 years from January 1, 2005. The net book value of this asset as of December 31, 2008 amounts to

€70 thousand.

7. GOODWILLGoodwill can be analyzed as follows:

December 31,

2008 2007 2006

Cost

As of January 1 4,260 1,914 1,914

Additions 5,185 2,206 —

Purchase price adjustments on prior business combinations, net 131 — —

Disposals and transfers — — —

Exchange differences (982) 140 —

As of December 31 8,594 4,260 1,914

Impairment

As of January 1 — — —

Impairment charge — — —

Disposals and transfers — — —

Exchange differences — — —

As of December 31 — — —

Goodwill 8,594 4,260 1,914

Purchase Price Adjustments in 2008

The Company claimed in 2007 a purchase price adjustment related to the value of certain inventories acquired as part of the

Connors Drilling asset acquisition. This claim was settled on the first quarter of 2008 and the Company obtained a purchase

price reduction amounting to €78 thousand, net of tax, reflected as a reduction of the goodwill in the table below.

In the context of the acquisition of a French company which took place in 2000, the Company was granted a

guarantee on assets acquired and liabilities assumed. The acquisition agreement also allows for adjustments to the cost

of the combination that were contingent to future events. These adjustments were not reflected at the time of the initial

recognition as there was no reliable estimate of their impact and they were contingent to future events. In the first quarter

of 2008, the Company definitively settled its obligations towards the vendors. The related additional consideration was

recognized as an adjustment to the cost of the combination which resulted in an increase of the goodwill for an amount of

€209 thousand, net of tax.


7. GOODWILL (cont’d)

Business Combination in 2008

The Company acquired 100% of the shares of Northwest Sequoia Drilling Ltd. specialized in rotary drilling services for

exploration, bulk sampling, and coring services to the mining and energy industry, on September 24, 2008.

Purchase consideration in thousands of €:

Cash consideration paid 6,350

1,150,000 treasury shares transferred 1,460

Direct cost relating to the acquisition 63

Net purchase consideration 7,873

Fair value of net assets acquired (see below) (2,688)

Goodwill 5,185

The above goodwill is attributable to the Northwest Sequoia Drilling Ltd position in the energy related market and to

its expertise in the large diameter and rotary drilling services. This goodwill is allocated to the mining and energy segment

of the Company.

The Company transferred 1,150,000 of its treasury shares as a purchase consideration for the acquisition of the

shares. These treasury shares were measured at their fair value at transfer date based on quoted price at the closing and

announcement of the transaction.

The assets and liabilities arising from the acquisition are as follows:

Estimated fair value

Value as per Company’s books

before purchase price allocation

Cash and cash equivalents 1,898 1,898

Equipment 1,704 960

Inventories 73 73

Trade and other receivables 884 884

Trade and other payables (745) (745)

Borrowings (121) (121)

Contingent liabilities — —

Retirement benefit obligations — —

Current income tax payable (760) (760)

Deferred tax, net (245) —

Net assets acquired 2,688 2,189

The acquired company contributed revenues of €734 thousand and nothing to operating profit to the consolidated

financial statements for the period from September 24, 2008 (acquisition date) to December 31, 2008.

Business Combination in 2007

The Company acquired through an asset deal nearly all the Canadian assets of Connors Drilling Ltd., a surface and

underground diamond drilling company, on February 1, 2007.

Purchase consideration in thousands of €:

Cash for the transfer of assets acquired 7,128

Escrow account to be repaid to Foraco International upon final closing date (735)

Direct cost relating to the acquisition 173

Net purchase consideration 6,566

Fair value of net assets acquired (see below) (4,360)

Goodwill 2,206

The above goodwill is attributable to Connors Drilling’s position and profitability in the Canadian market which

serves the mining industry and the synergies expected to arise after the Group’s expansion in Canada Eastern territories.

This goodwill is allocated to the mining segment of the Company.


7. GOODWILL (cont’d)The assets and liabilities arising from the acquisition are as follows:

Estimated Fair

Value

Value as per Asset Purchase

Agreement

Cash and cash equivalents — —

Trademarks 324 324

Customer relationships 448 —

Land and buildings 546 546

Equipment 2,026 2,088

Inventories 1,369 1,416

Trade and other receivables 876 876

Trade and other payables (1,113) (1,113)

Contingent liabilities — —

Retirement benefit obligations — —

Deferred tax, net (118) —

Net assets acquired 4,360 4,138

Allocation of Goodwill to Cash Generating Units

Goodwill is allocated to the Company’s business segments as follows:

December 31,

2008 2007 2006

Water 1,516 2,744 398

Mining 7,078 1,516 1,516

Total 8,594 4,260 1,914

Impairment Tests for Goodwill

The recoverable amount of cash generating units is determined based on value‑in‑use calculations. The Group used cash

flow projections before tax based on financial budgets approved by management. Cash flows beyond the budgeted period

are extrapolated using the estimated growth rate of activities.

The key assumptions which are approved by the Board of Directors and used for value‑in‑use calculations as of

December 31, 2008 are as follows:

Water Mining

Long‑term growth rate used to determined the terminal value 0% 0%

Discount rate 13% 13%

In 2008, 2007 and 2006 the Company did not record any goodwill impairment charge.

8. INVESTMENTS IN ASSOCIATESInvestments in associates can be analyzed as follows:

2008 2007 2006

Investments in associates as of January 1 — 75 120

Share payment/dividends — (144) (120)

Share of (loss)/profit, after tax — 69 75

Investments in associates as of December 31 — — 75

Until December 31, 2007, the Company operated three contracts in Ghana under a joint venture agreement with a

Ghanaian company. The percentage of Group interest in this joint venture was 50%. The Group did not have control of this

entity, which is therefore consolidated under the equity method.


8. INVESTMENTS IN ASSOCIATES (cont’d) The Group’s share of total assets, total liabilities, revenue and results with regards to the joint venture was

as follows:

December 31,

2008 2007 2006

Total Assets — — 278

Total Liabilities — — 129

Total Revenues — 767 529

Profit/(Loss) group’s share — 69 75

Investments in associates did not include goodwill.

9. OTHER NON-CURRENT ASSETSOther non‑current assets consist of the following:

December 31,

2008 2007 2006

Loans 65 186 172

Software 7 8 17

Investment in unconsolidated affiliates 21 21 21

Deposits and guarantees 92 114 193

Other non current receivables 22 11 10

Other non-current assets 207 340 413

The investment in unconsolidated affiliates corresponds to the company “Mineral Chimù” (Peru), in which the

Company holds 16.9%, and the company “Le Sel du Niger” (Niger), in which the Company holds 40%.

10. INVENTORIESInventories consist of the following:

December 31,

2008 2007 2006

Spare parts, gross 8,381 7,399 6,340

Consumables, gross 6,509 6,054 5,189

Less inventory allowance (61) (64) (448)

Inventories, net 14,829 13,389 11,081

Spare parts mainly include motors, wire lines and heads. Spare parts are charged to the statement of income

when used on equipment. Consumables mainly include destructive tools, hammers, muds and casing, Consumables are

charged to the statement of income when delivered to the field. The Company reviews impairment loss on inventories on

a regular and item by item basis.

Inventories write‑down expense/(reversal) recognized in 2008 in the statement of income under the line item “Cost

of sales” amounts to €3 thousand (in 2007 €24 thousand and in 2006 €(64) thousand).


11. TRADE RECEIVABLESTrade receivables, net, consist of the following:

December 31,

2008 2007 2006

Trade receivable, gross 13,317 16,451 13,372

Less provision for impairment (796) (553) (348)

Receivables from related parties — — —

Trade receivables, net 12,521 15,898 13,024

Impairment expense/(reversal) recognized in 2008 in the statement of income amounted to €243 thousand (in 2007

€389 thousand and in 2006 €(76) thousand) under the line item “Cost of sales”.

Trade receivables, net, are broken down per location as follows:

December 31,

2008 2007 2006

France 341 4,095 1,917

New Caledonia 1,323 585 378

Africa 9,084 9,479 10,315

South America 620 — —

Canada 1,153 1,739 414

Trade receivables, net 12,521 15,898 13,024

The geographical allocation of a receivable is based on the location of the project to which the receivable relates and

not to the country where the client is incorporated.

Fair value of trade accounts receivable based on discounted cash flows does not differ from the net book value as

the Company does not have trade accounts receivable with payment terms exceeding one year.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of trade receivable

mentioned above. Certain receivable are pledged as securities of borrowings (see Note 30).

As of December 31, 2008, trade receivables of €1,839 thousand (€1,916 thousand in 2007 and €3,406 thousand

in 2006) were past due but not impaired. These relate to a number of customers for whom there is no recent history of

default or having established practices of long payment terms such as States bodies in the Water segments.

The carrying amounts of the Company’s trade receivables are denominated in the following currencies:

December 31,

2008 2007 2006

€, CFA Francs or CFP Francs(*) 10,748 14,159 12,610

Canadian dollars 1,153 1,547 376

Other currencies 620 192 38

Trade receivables, gross 12,521 15,898 13,024(*) CFA Francs and CFP Francs have a fixed exchange rate with €

12. OTHER CURRENT RECEIVABLESOther current receivables consist of the following:

December 31,

2008 2007 2006

VAT / GST and other recoverable taxes 4,420 3,417 3,208

Prepaid expenses 1,195 655 670

Down payments / credit notes receivable 586 769 235

Accrued income 50 — 20

Other receivables 268 951 243

Other current receivables 6,519 5,793 4,376


12. OTHER CURRENT RECEIVABLES (cont’d) Provisions for impairment of other current receivables amounted to nil as of December 2008 (€77 thousand in 2007

and €0 thousand in 2006).

VAT / GST and other recoverable taxes mainly comprise tax receivables from African States.

In accordance with the Asset Purchase Agreement in connection with Connors’ net assets acquisition, the Company

made in 2007 a deposit amounting to €735 thousand on an escrow account maintained in Canada (presented as “Other

receivables”). This escrow account was repaid to the Company in March 2008 as part of the final settlement of the payable

purchase consideration (see Note 7).

Fair value of other current receivables based on discounted cash flows does not differ from the net book value as

the Company does not have other current receivables with payment terms exceeding one year.

The carrying amounts of the Company’s other receivables are denominated in the following currencies:

December 31,

2008 2007 2006


Canadian dollars 281 1,048 139


Other current receivables, gross 6,519 5,793 4,376

(*) CFA Francs and CFP Francs have a fixed exchange rate with €

13. CASH AND CASH EQUIVALENTSCash and cash equivalents consist of the following:

December 31,

2008 2007 2006

Cash at bank and in hand 3,450 5,450 2,410

Short‑term bank deposits 10,605 17,814 903

Cash and cash equivalents 14,055 23,264 3,313

Short term bank deposits are analyzed as follows:

Financial institution Type Index

Fair value as of December 31,

2008

BNP Paribas € 3 months fixed term deposit Fixed 2,880

BNP Paribas € monetary marketable security Eonia 620

Crédit Agricole group € 3 months fixed term deposit Fixed 2,151

Crédit Agricole group € monetary marketable security Eonia 211

Banques Populaires € 3 months fixed term deposit Fixed 2,150

Banques Populaires € monetary marketable security Eonia 219

Crédit Mutuel group € 6 months fixed term deposit Fixed 1,306

Crédit Mutuel group € monetary marketable security Eonia 213

Société Générale € 3 months fixed term deposit Fixed 855

Total 10,605


14. EQUITY ATTRIBUTABLE TO THE COMPANY’S EQUITY HOLDERSConsolidated reserves, including net income for the period and other reserves, can be analyzed as follows:

December 31,

2008 2007 2006

Foraco International share premium and retained earnings 34,373 35,170 7,421

Reserves of consolidated subsidiaries 18,383 9,615 7,643

Others reserves (1,299) 700 (1,210)

Total consolidated reserves 51,457 45,485 13,854

Under French law, dividends can be paid only from the reserves of the parent company (Foraco International).

As at December 31, 2008, the value of distributable reserves amounted to €38,937 thousand (€35,028 thousand as of

December 31, 2007 and €7,260 thousand as of December 31, 2006).

All shares issued by the Company have a par value of €0.015 and were fully paid.

Items included in other reserves can be analyzed as follows:

Year ended December 31,

2008 2007 2006

Employee share‑based compensation 356 1,082 —

Actuarial gains / (losses), net of tax — 36 (649)

Currency translation differences (2,355) (418) (561)

Other reserves (1,299) 700 (1,210)

Description of the Initial Public Offering in 2007

Prior to the Initial Public Offering in 2007, the Company completed certain reorganization of its share capital:

On June 7, 2007, the shareholders approved an increase in capital by an amount of • €9 thousand divided into

596 common shares each with a par value of €15.25, so that the capital be increased to €665 thousand, divided

into 43,596 common shares. These new shares were reserved for issuance at par value to existing shareholders

on a pro‑rata basis. Certain of these shares were granted to Directors of the Company and are considered as

share‑based compensation (see Note 23).

On June 29, 2007, the Shareholders of the Company approved an increase in the number of shares (referred to •

as share split), so that the capital of €665 thousand be divided into 43,596,000 common shares so that each

shareholder received 999 common shares for each one common share held in the capital of the Company.

On August 2, 2007 the Company completed its Initial Public Offering of 14,040,870 common shares at a price of

Can$2.40 per share. In conjunction with the completion of the Initial Public Offering, certain selling shareholders of the

Company have sold an aggregate of 520,000 common shares of the Company at a price of Can$2.40 per share for gross

proceeds to the selling shareholders of Can$1,248 thousand.

On August 20, 2007 the underwriter exercised its right over allotment options at Can$ 2.40 for 2,106,130 common

shares. As part of this offering the Company also granted for no consideration 833,350 warrants to the underwriter with

an 18 months exercise period. These warrants are considered as share‑based compensation (see Note 23) and are taken

into account as appropriate in the determination of the Diluted Earnings per share (see Note 27). As of December 31, 2008

these warrants have not been exercised and expired in subsequent period (see Note 31).

After these transactions, the share capital amounted to €911 thousand and the outstanding and issued common

shares became 59,743,000.


14. EQUITY ATTRIBUTABLE TO THE COMPANY’S EQUITY HOLDERS (cont’d)The reconciliation of the gross proceeds to the net proceeds to the Company is summarized as follows:

In thousands

of Can$In thousands

of €

Gross proceeds from the treasury offering, 16,147,000 at Can$2.40 38,753 26,958

Underwriter’s fees corresponding to 7% of the gross proceeds of the offering (2,713) (1,887)

Expenses of the offering. (1,668) (1,160)

Net proceeds to the Company as per consolidated statement of cash flows 34,372 23,910

Tax effect 1,468 1,021

Net proceeds to the Company, net of tax as per consolidated statement of equity 35,840 24,931

The net proceeds arising from the Initial Public Offering thousand were used by the Company to retire existing debt

of the Company. The remaining balance has and will be used to expand the business by way of strategic acquisitions or

through organic growth and for general corporate purposes. The reconciliation of the share capital and share premium at the beginning and end of the year ended December 31, 2007 is summarized as follows:

Number of

shares(1)

Ordinary shares in thousands €

Share Premium(2) in thousands €

As at January 1, 2007 43,000,000 656

Issue of share capital on June 7, 2007 596,000 9 —

Issue of share capital on August 2, 2007 14,040,870 214 21,679

Issue of share capital on August 20, 2007 2,106,130 32 3,252

As at December 31, 2007 59,743,000 911 24,931(1) After giving effect to the share split that occurred on June 29, 2007

(2) Net of issuance costs and income tax

Incremental costs that are directly attributable to the issuance of shares and that would not have been incurred if the Company had not issued such shares, were reported as a reduction of the amounts paid‑in. Incremental costs generally include underwriter fees and other external costs directly attributable, but exclude internal costs and marketing costs, including those related to the road show, which were recorded within net profit. As of December 31, 2007 costs relating to the offering amounting to €2,026 thousand were accounted against the paid in capital, net of tax.

Treasury Shares Transactions in 2008

On May 28, 2008, the Company acquired 1,500,000 of its own shares through purchases from Banque de Vizille a former shareholder. The total amount paid to acquire the common shares, net of income tax, was €3,361 thousand (or Can$5,250 thousand). The shares are held as “treasury shares” and are deducted from retained earnings within shareholders’ equity. The Company has the right to transfer or resell these shares at a later date. On September 24, 2008, in connection with the acquisition of Northwest Sequoia Drilling Ltd (see Note 7), the Company used 1,150,000 of these treasury shares to form part of the consideration paid for the acquisition. This transfer of shares was assessed at the published price of Company’s shares at acquisition date (i.e. Can$ 1.90). On October 1, 2008, the Company filed a notice in respect of a Normal Course Issuer Bid (“NCIB”) with the TSX. Pursuant to this NCIB, the Company may purchase up to 1,000,000 of its common shares on the public market. As of December 31, 2008 the Company has acquired 105,244 of its own shares at an average purchase price of €0.52 (or Can$ 0.81). The reconciliation of the share capital and share premium at the beginning and end of the year ended December 31, 2008 is summarized as follows:

Number of

sharesOrdinary shares in thousands €

Share Premium(1) in thousands €

As at January 1, 2008 59,743,000 911 24,931

Acquisition of treasury shares on May 28, 2008 (1,500,000) — (3,361)

Transfer of treasury shares on September 24, 2008 1,150,000 — 1,849

Acquisition of treasury shares under NCIB (105,244) — (55)

As at December 31, 2008 59,287,756 911 23,364

(1) Net of issuance costs and income tax


14. EQUITY ATTRIBUTABLE TO THE COMPANY’S EQUITY HOLDERS (cont’d)

Free share plan

The Company implemented in 2007 a free share plan whereby it awards ordinary Company’s shares to certain executive employees for no cash consideration subject to certain service period. This plan was authorized by the ordinary and extraordinary general meeting of shareholders held in June 2007. The total number of shares to be transferred under the free share plan is limited to 3% of the issued and outstanding share capital of the Company on the date grants are made. Such awards are considered as share based payment transactions (see Note 23). A first tranche and second tranche under the free share plan were for 512,000 and 424,000 shares in 2007 and 2008, respectively. Shares to be transferred under the plan upon completion of vesting conditions will be purchased by the Company and there will be no increase in share capital. These awards are taken into account as appropriate in the determination of the Diluted Earnings per share (see Note 27). The Company currently does not plan to adopt any other form of share plans, including any stock option plans.

15. MINORITY INTERESTChanges in minority interest are detailed as follows:

December 31,

2008 2007 2006

Minority interest at the beginning of the year 171 112 210

Minority interest in net income for the year 60 59 (85)

Dividends paid to minority shareholders (42) — (13)

Minority interest at the closing of the year 189 171 112

16. BORROWINGSFinancial debt consists of the following:

December 31,

2008 2007 2006

Non-current

Other bank financings 738 1,431 1,352

Finance lease obligations 744 1,135 1,978

Bank loan financing the acquisition of Boniface — — 16

Other debt linked to the acquisition of Boniface — — 80

Bank loan financing the acquisition of Geomechanik — — 442

1,482 2,566 3,868

Current

Bank overdrafts — 638 1,976

Obligation under assignment of trade receivables 2,205 2,960 4,596

Other bank financings 605 737 661

Finance lease obligations 454 744 974

Bank loan financing the acquisition of Boniface — 16 170

Other debt linked to the acquisition of Boniface — 80 —

Bank loan financing the acquisition of Geomechanik — — 443

3,264 5,175 8,820


16. BORROWINGS (cont’d)Certain European subsidiaries of the Company transferred receivable balances amounting to €2,205 thousand to banks

in exchange for cash during the year ended December 31, 2008 (€2,960 thousand in 2007 and €4,596 thousand in

2006). These transactions were accounted for as an assignment of trade receivables with recourse (or collateralized

borrowing). In case the entities default under the assignment agreement, banks have the right to receive the cash flows

from the receivables transferred. Without default, the entities will collect the receivables and allocate new receivables

as a collateral.

As of December 31, 2008, maturity of financial debt can be analyzed as follows:

MaturityLess than one year

One to five years

More than five years Total

Obligation under assignment of trade receivables 2,205 — — 2,205

Other bank financing 605 738 — 1,343

Finance lease obligations 454 744 — 1,198

Total financial debt 3,264 1,482 — 4,746

As of December 31, 2008 the estimated fair value of financial debt determined based on the discounted value

of future cash flows (principal and interest) at Euribor 3m, plus a spread amounting to 100 b.p., amounted to €4,728

thousand compared to a carrying amount of €4,746 thousand (€7,883 thousand compared to a carrying amount of

€7,741 thousand as of December 31, 2007).

The average effective interest rates of financial debt at the balance sheet date were as follows:

December 31,

2008 2007 2006

Bank overdraft and obligation under assignment of trade receivables

Euribor 3m plus 100 up to 200 b.p, or C$ prime rate, plus 0 up to 75 b.p.

Other bank financing 4.0% 4.0% 3.0%

Finance lease obligations 3.5% 3.5% 3.5%

Bank loans and debts relating to acquisitions N/A Euribor 3m, plus 160 up to 180 b.p.

The carrying amounts of the Company’s borrowings are denominated in the following currencies:

December 31,

2008 2007 2006

€ 4,247 6,966 12,159

Canadian dollars 498 775 529

Total financial debt 4,745 7,741 12,688

Company’s borrowings are not subject to any financial covenant.

Unused short term credit facilities amount to €12,699 thousand as of December 31, 2008. This facility granted on

a yearly basis and subject to review at various dates.

Total financial debts include collateralized borrowings of €3,339 thousand:

Obligations under assignment of receivables for • €2,205 thousand is secured by receivables that have been

transferred; and

Finance lease obligations amounting to • €1,196 thousand are secured by related leased assets.


17. DEFERRED INCOME TAXDeferred income tax assets and liabilities are offset when there is a legally enforceable right to offset a current tax asset

against a current tax liability, which relates to income taxes levied by the same tax authority and when that tax authority

permits the Company to make or receive a single net payment.

This applies in France under the consolidation tax regime, for which all domestic entities of the Group have opted

for from January 1, 2001.

Deferred tax assets are recorded for unused tax losses when the realization of a future taxable income is probable,

taking into account the planning of the reversal of temporary differences.

The deferred tax liabilities were determined for the withholding tax due on the reserves of the subsidiaries, when

distributions are probable.

The components of the net deferred tax liabilities recorded as at December 31, 2008, 2007 and 2006 are

as follows:

December 31,

2008 2007 2006

Assets

Pension obligation 93 74 —

PE depreciation differences — 2 39

Losses carried forward — — 356

Tax provisions — 39 152

Allowance for doubtful receivable — 231 98

Other tax temporary differences — 167 —

Total 93 513 645

To be recovered after 12 months 93 434 395

To be recovered within 12 months — 79 250

Liabilities

Pension obligation — — (83)

Finance leases (330) (259) (298)

Reversal of tax provision — — (31)

Reversal of intercompany balances depreciation (204) (204) (204)

Costs capitalization (242) (221) (117)

Revenue recognition (244) (180) (160)

Other tax temporary differences (16) — —

Total (1,036) (864) (893)

To be recovered after 12 months (682) (684) (702)

To be recovered within 12 months (354) (180) (191)

The gross movement on the deferred income tax net position is as follows:

December 31,

2008 2007 2006

Beginning of the year (352) (248) (790)

Charged/(Credited) to the statement of income (591) (111) 282

Charged/(Credited) directly to equity — 7 260

End of the year (943) (352) (248)

Deferred income tax assets are recognized for tax loss carry‑forwards to the extent that the realization of the related

tax benefit through the future taxable profits is probable. As of December 31, 2008 the Company has no unrecognized

carry‑forward tax loss.

No deferred income tax liabilities have been recognized for the withholding tax and other taxes that would be

payable on the unremitted earnings of certain subsidiaries as such amounts are permanently reinvested.


18. PROVISIONSProvisions comprise of the following elements:

Pension & retirement

indemnities provision

Other provisions Total

At January 1, 2007 2,995 — 2,995

Charged to statement of income:

— Additional provisions 107 45 152

— Unused amounts reversed — — —

Used during year (225) — (225)

Actuarial gains and losses recognized directly in Equity 105 105

Impact of the settlement of Germany plans – reorganization program (Note 22) (2,637) — (2,637)

At December 31, 2007 345 45 390

At January 1, 2008 345 45 390

Charged to income statement:

— Additional provisions 45 — 45

— Unused amounts reversed — — —

Used during year (77) (20) (97)

Actuarial gains and losses recognized directly in Equity — — —

At December 31, 2008 313 25 338

The obligation related to former German employees was transferred to outside the Group in 2007. In accordance within

IAS 19, the provision, amounting to €2,637 thousand, was reversed on the settlement date and related actuarial losses,

amounting to €793 thousand, were directly transferred from “Other reserves” to “Share premium and retained Earnings”.

Analysis of total provisions:

December 31,

2008 2007 2006

Current 25 45 363

Non‑current (retirement and litigation) 313 345 2,632

Provisions 338 390 2,995

The Company faces various forms of litigation and legal proceedings throughout the normal course of business.

The Company records a provision for these risks based on its past experience and on facts and circumstances known on

the balance sheet date. The Company’s Management is of the opinion that the expenses to be incurred in resolving such

affairs will not have a significant additional impact on its consolidated financial situation, income or cash flows.

19. RETIREMENT BENEFIT OBLIGATIONSubstantially all of the Company’s employees, with the exception of those in France, are covered under Government‑

sponsored health and life insurance benefit plans. Accordingly, the Company has no significant liability to its employees in

terms of post‑retirement benefits other than pensions and therefore no provision is made.

In France, the Company contributes to the national pension system whereby its obligations to employees in terms of

pensions are restricted to a lump‑sum length of service award payable at the date the employee reaches retirement age,

such an award being determined for each individual based upon years of service provided and projected final salary.

The pension obligation has been estimated on the basis of actuarial assumptions, including a discount rate of 5.5%,

inflation rate of 2.25% and retirement ages conforming with the law applicable in France. These retirement indemnities are

not funded nor covered by pension plan assets.

The provision relating to French retirement indemnities amounts to €313 thousand as of December 31, 2008.

Payments made by the Company for defined contribution plans are accounted for as expenses in the income

statement during the period in which they were incurred.


20. TRADE AND OTHER PAYABLESTrade and other payables consist of the following:

December 31,

2008 2007 2006

Trade payables 8,362 10,207 7,234

Social security and other taxes 4,208 2,747 2,592

VAT / GST and other tax payable 3,497 2,758 1,674

Down payments from customers 2,350 3,377 2,684

Deferred income — 285 136

Related party payable (see Notes 22 and 31) 1,067 2,218 —

Other miscellaneous payable 368 379 612

Trade and other payables 19,852 21,971 14,932

VAT / GST and other tax payable mainly comprise tax payables to African States.

Trade and other payables are denominated in the following currencies:

December 31,

2008 2007 2006


Canadian dollars 2,302 2,548 1,665


Trade and other payables 19,852 21,971 14,932(*) CFA Francs and CFP Francs have a fixed exchange rate with €

21. EXPENSES BY NATUREOperating expense/(income), net by nature are as follows:

December 31,

2008 2007 2006

Depreciation, amortization and impairment charges 5,917 5,147 2,646

Provision increases/(reversals) 221 317 (315)

Raw materials, consumables used and external charges 40,485 35,222 22,092

Employee benefit expense 22,885 20,106 6,518

Other tax expense 1,107 1,130 923

Other operating expense/(income), net 40 (70) (23)

Share‑based compensations granted as part of the IPO — 983 —

Loss following the reorganization program (see Note 23) — 312 —

Total of operating expenses 70,655 63,147 31,841

Number of employees (unaudited) 931 754 476

Other operating expense/(income), net are as follows:

December 31,

2008 2007 2006

Profit / (loss) on property and equipment sales 17 (61) (40)

Other 23 (9) 17

Total other operating expense/(income) 40 (70) (23)


22. REORGANIZATION PROGRAMIn October 2007, the Company completed a reorganization program whereby its property and premises located in Lunel

(France) and Woringen (Germany), and certain obligations under a defined benefit pension plan relating to its German

subsidiary Geomechanik (see Note 19) were transferred to a non‑consolidated entity owned and co‑managed by two of

the Directors and current shareholders of Foraco. This reorganization program was initiated in early 2007.

Following the completion of these transactions the premises in Woringen and Lunel have been leased back to the

Company at market rate. The lease in respect to the premises in Woringen, Germany is for a term of two years, with an

annual rent of €20 thousand. The lease in respect to the premises in Lunel is for a term of nine years, with an annual rent

of €181 thousand. The Company benefits from an option to terminate the lease for the premises in Lunel at the end of the

sixth and ninth year of the tenancy. These leases are renewable.

These transactions resulted in a loss that can be analyzed as follows:

Profit on real estate properties disposal 1,549

Loss on settlement of pension obligation(1) (1,863)

Other items 2

Reorganization program impact (312)(1) The €1,863 loss on the settlement of the pension obligation is the consequence of the premium required for a full transfer of pension

obligations without recourse against the Company.

The net amount payable by the Company following the reorganization breaks down as follows:

Consideration attributable to the logistic premises in Lunel (France) and Woringen (Germany) 2,332

Fair value of the pension obligation transferred (4,500)

Other items (50)

Net amount payable to the Company (2,218)

The net amount payable by the Company is payable within six months of notice demanding payment be delivered to the

Company. Until paid, this payable will bear interest at Euribor 3m plus 150 b.p. payable on a quarterly basis.

23. SHARE-BASED COMPENSATION December 31,

2008 2007 2006

520,000 free common shares to the benefit of certain directors — 781 —

833,350 warrants issued for the benefit of IPO underwriter — 202 —

512,000 free common shares to the benefit of certain executive employees 296 99 —

424,000 free common shares to the benefit of certain executive employees 60 — —

Total of non-cash share-based compensation expenses 356 1,082 —

Share-Based Compensation Directly Related to the Initial Public Offering

In June 2007, 520 common shares – before the effect of share split – have been issued to the benefit of certain directors

for nominal consideration. This issuance is treated as share‑based compensations as these shares have been issued

at a price amounting to less than the fair value. The Company recognized an expense amounting to €781 thousand

corresponding to the difference between the issue price of these shares and their fair value (deemed to be the share price

at Initial Public Offering date i.e. Can$2.40).

In August 2007, in accordance with the provision of the underwriting agreement, 833,350 warrants to be

converted into common shares of the Company were issued for no compensation to the benefit of Research Capital

Corporation. This issuance is treated as share‑based compensations as these shares have been issued at a price

amounting to less than the fair value. These warrants vest immediately. The fair value of warrants has been determined

using a Black‑Scholes option pricing model with the following assumptions determined at grant date:


23. SHARE-BASED COMPENSATION (cont’d)Conversion rate• one common share for one warrant

Strike price • Can$2.40

Fair value at grant date• Can$2.40 (share price at IPO date)

Expected volatility based on comparables• 37.0%

Risk free interest rate• 4.7%

Expected exercise period• 9 months

Final maturity• 18 months

Expected dividend• none

The Company recognized an expense amounting to €202 thousand in 2007, corresponding to the fair value of

these warrants. These warrants expired in February 2009.

These non cash, non recurring share‑based compensations have been disclosed in a separate line item of the

statement of income “Share‑based compensation granted as part of the IPO” for a total amount of €983 thousand.

Other share‑based payment transaction with employees (see Note 14)

Awards under the Company’s free share plan are within the scope of IFRS 2, Share‑based payment as they are

issued at a price that is less than the fair value of those equity instruments. From grant date, the Company will amortize

over the corresponding vesting period the fair value of the free common shares granted to employees.

The main provisions of this share plan are as follows:

First tranche awarded in 2007Grant date• September 2007

Number of free shares issued • 512,000

Vesting period for the French plan• 2 years(1)

Vesting period for the International plan• 4 years

Fair value of common shares at grant date• Can$2.70

Anticipated turnover• 5.0% per year

Total fair value of the plan• €862 thousand

Second tranche awarded in 2008

Grant date• October 2008

Number of free shares issued • 424,000

Vesting period for the French plan• 2 years(1)

Vesting period for the International plan• 4 years

Fair value of common shares at grant date• Can$1.95

Anticipated turnover• 5.0% per year

Total fair value of the plan• €484 thousand(1) Plus an additional 2‑years lock up period following vesting date.

The impact of these non cash share‑based compensations is presented within “Cost of sale” or “General and

administrative expenses” depending on the employee benefiting from the award.

The dilutive effect of these awards, if any, is taken into account in the calculation of the diluted earnings per share

(see Note 27).

24. FINANCE COSTSFinancial income and expense, net, consists of the following:

December 31,

2008 2007 2006

Interest expense (714) (1,174) (486)

Gains on short term deposits 699 403 —

Other 87 — 12

Finance costs 72 (771) (474)


25. INCOME TAX EXPENSEThe tax rate payable by Foraco International is the French tax rate set at 33.33% for fiscal year 2008. The Group also

operates in certain countries in which effective rates of tax can be different.

Income tax expense is presented as follows:

December 31,

2008 2007 2006

Current tax (4,965) (4,120) (938)

Deferred tax (591) (111) 282

Total (5,556) (4,231) (656)

The reconciliation between the income tax expense using the French statutory rate and the Company’s effective tax rate

can be analyzed as follows:

December 31,

2008 2007 2006

Income (loss) before taxes and share of profit from associates 15,971 10,660 2,748

Tax calculated at French tax rate (33.33% for 2008) 5,324 3,553 943

Effect of different tax rates 76 113 (447)

Share‑based payment expense 119 360 —

Change in tax rate at French level 30 15 24

Expenses not deductible for tax purposes 7 190 85

Unrecognized tax assets — — 51

Total 5,556 4,231 656

26. NET FOREIGN EXCHANGE GAIN/(LOSSES)The exchange differences (charged)/credited to the statement of income in 2008, 2007 and 2006 are not material.

27. EARNINGS PER SHAREBasic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted

average number of ordinary shares in issue during the year.

The Company has issued certain dilutive equity instruments as part of its Initial Public Offering and under its free

share plan (see Note 14 and 23).

December 31,

2008 2007 2006

Profit attributable to equity holders of the Company in thousands of € 10,355 6,439 2,252

Weighted average number of ordinary shares in issue before dilution 58,662,460 49,902,761 43,802,716

Basic earnings per share (€ per share) 0.18 0.13 0.05

Weighted average number of ordinary shares in issue after dilution 59,130,302 50,396,327 43,802,716

Diluted earnings per share (€ per share) 0.18 0.13 0.05

28. DIVIDENDS PER SHAREThe board of directors held on March 2, 2009 proposed to the shareholders’ annual general meeting to be held on

May 11, 2009 a dividend distribution for year ended December 31, 2008 amounting to €836 thousand or €0.014 per

share (€836 thousand or €0.014 per share in 2007 and €602 thousand in 2006 or €0. 014 per share).


29. COMMITMENTS AND CONTINGENCIESThe guarantees given are the following:

December 31,

2008 2007 2006

Bid bonds 1,174 1,277 698

Advance payment guarantees and performance guarantees 11,520 11,154 10,261

Retention guarantees 4,049 3,113 2,109

Financial guarantees 1,991 1,407 1,385

Total 18,734 16,951 14,453

The Company entered into an operating lease in respect of its premises in Lunel for a term of nine years with an

annual rent of €181 thousand. This lease will end in 2015.

In 2004, the Company launched an arbitration process against a former customer Codelco, a Chilean state‑owned

company. This dispute arose following the breach of the provisions of a drilling contract in relation to the 2002 and 2003

period. In November 2008, the arbitrator issued his final decision whereby Codelco is required to pay for certain drilling

services which were contested, a net amount of U.S. $806 thousand (€620 thousand). This decision is final, except for

one further claim still challenged by the Company related to the “breach of contract”, submitted to the Appeal Court. The

revenue which was previously deferred has been recognized in the period.

Generally, the Company is subject to legal proceedings, claims and legal actions arising in the ordinary course

of business. The Company’s management does not expect that the ultimate costs to resolve these matters will have a

material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

30. RELATED-PARTY TRANSACTIONSAs of December 31, 2008, the shareholders of the Company are composed of a holding company which is under the

control of the management. This holding company holds 62.9% of the shares before dilutive instruments. 36.2% is available

on the Toronto Stock Exchange (excluding treasury shares owned by the Company).

The key management compensation is as follows:

Wages and

bonuses

Share-based payment expense

Other benefits Total

Key management. 1,065 — — 1,065

Board of Directors members other than key management.. 54 — — 54

Year ended December 31, 2008 1,119 — — 1,119

Key management 804 781 60 1,645

Board of Directors members other than key management.. 14 — — 14

Year ended December 31, 2007 818 781 60 1,659

Key management 336 — — 336

Board of Directors members other than key management.. — — — —

Year ended December 31, 2006 336 — — 336

The Company did not contribute to any special pension scheme for management.

The Company paid during the period to a related party certain lease rentals amounting to €217 thousand and

financial interest with respect to its loan payable of €150 thousand (€62 thousand and €27 thousand in 2007, respectively).

The outstanding balance of the related loan payable as at December 31, 2008 amounts to €1,067 thousand.

The Company has not carried out any other transactions with related parties.

31. EVENTS AFTER THE BALANCE SHEET DATEAs part of the Company’s initial public offering which took place in 2007, 833,350 warrants were granted to the underwriter

at an exercise price of Can$2.40. These warrants expired without being exercised on February 2, 2009.

On March 2, 2009, the Board of Directors proposed a dividend payment of €0.014 per common share to be

approved by shareholders at the Company’s Annual General Meeting on May 11, 2009.

corporate head office26 Plage de l’Estaque 13016 Marseille, France T: +33 (0)4 96 15 13 60 F: +33 (0)4 96 15 13 61 Website: www.foraco.com

board of directorsDaniel Simoncini (Chairman)Jean-Pierre CharmensatJean Paul CamusBruno ChabasWarren Holmes

transfer agentComputershare Trust Company of Canada 510 Burrard Street Vancouver, B.C. V6C 3B9

auditorsPricewaterhouseCoopers

legal counselFasken Martineau DuMoulin LLP

market dataShares of Foraco International S.A. are listed on the Toronto Stock Exchange under the symbol FAR

investor contactBruce Wigle The Equicom Group Inc. T: (416) 815-0700 ext. 228 E: [email protected]

annual general meetingMay 11, 2009, at 10:00 am 26, Plage de l’Estaque 13016 Marseille, France D

esig

n an

d P

rod

uctio

n b

y E

qui

com

, a T

MX

Gro

up C

om

pan

y.

shareholder information

profileForaco International SA is a global drilling contractor providing turnkey solutions for

mining, energy, water and infrastructure projects across 18 countries and five continents.

The company offers a modern drilling fleet, best-in-class safety standards and a versatile,

well-trained international workforce. Foraco has drilled in every conceivable geological

formation worldwide, often located in some of the most inaccessible regions of the world.

With extensive international drilling experience, Foraco has the expertise to efficiently and

safely meet customer requirements, whether it requires custom engineering of drill rigs

or specialized drilling techniques. Headquartered in Marseilles, France, Foraco is publicly

traded on the Toronto Stock Exchange under the ticker symbol “FAR”.

missionWe are focused on creating a world leading drilling services company by offering a unique

combination of global experience, local expertise, and constant customer focus.

valuesWe strive to run our business with the highest level of integrity, so that it is reflected in

everything we do, all of the time – be it in the field or in the office. We have set up a fluid,

pro-active, close-to-field organization that generates close involvement of our teams in

every customer project. We use innovation in each and every aspect of our business,

from our contractual approach and the way we set up project operations, to the design

and manufacture of specialized equipment for our customers.

annual report 2008


26 Plage de l’Estaque13016 Marseille, France

www.foraco.com


foraco international 2008 annual report

Investor Relations